Correlation Between Power Ledger and AION
Can any of the company-specific risk be diversified away by investing in both Power Ledger and AION at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Power Ledger and AION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Ledger and AION, you can compare the effects of market volatilities on Power Ledger and AION and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Power Ledger with a short position of AION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Ledger and AION.
Diversification Opportunities for Power Ledger and AION
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Power and AION is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Power Ledger and AION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AION and Power Ledger is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Power Ledger are associated (or correlated) with AION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AION has no effect on the direction of Power Ledger i.e., Power Ledger and AION go up and down completely randomly.
Pair Corralation between Power Ledger and AION
Assuming the 90 days trading horizon Power Ledger is expected to generate 121.82 times less return on investment than AION. But when comparing it to its historical volatility, Power Ledger is 22.99 times less risky than AION. It trades about 0.03 of its potential returns per unit of risk. AION is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 7.12 in AION on January 25, 2024 and sell it today you would lose (6.59) from holding AION or give up 92.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power Ledger vs. AION
Performance |
| Timeline |
| Power Ledger |
| AION |
Power Ledger and AION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power Ledger and AION
The main advantage of trading using opposite Power Ledger and AION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Ledger position performs unexpectedly, AION can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AION will offset losses from the drop in AION's long position.| Power Ledger vs. Solana | Power Ledger vs. XRP | Power Ledger vs. Staked Ether | Power Ledger vs. The Open Network |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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