Correlation Between Ankr Network and Aave

Can any of the company-specific risk be diversified away by investing in both Ankr Network and Aave 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 Ankr Network and Aave into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ankr Network and Aave, you can compare the effects of market volatilities on Ankr Network and Aave 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 Ankr Network with a short position of Aave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ankr Network and Aave.

Diversification Opportunities for Ankr Network and Aave

0.56

Correlation Coefficient

Ankr Network  Aave

Very weak diversification

The 3 months correlation between Ankr and Aave is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ankr Network and Aave in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aave and Ankr Network 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 Ankr Network are associated (or correlated) with Aave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aave has no effect on the direction of Ankr Network i.e., Ankr Network and Aave go up and down completely randomly.

Pair Corralation between Ankr Network and Aave

Assuming the 90 days trading horizon Ankr Network is expected to generate 1.41 times more return on investment than Aave. However, Ankr Network is 1.41 times more volatile than Aave. It trades about 0.16 of its potential returns per unit of risk. Aave is currently generating about 0.03 per unit of risk. If you would invest  2.49  in Ankr Network on February 8, 2024 and sell it today you would earn a total of  2.14  from holding Ankr Network or generate 85.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ankr Network  vs.  Aave

Ankr Network

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ankr Network are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Ankr Network exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aave

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aave are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Aave may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Ankr Network and Aave

The main advantage of trading using opposite Ankr Network and Aave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ankr Network position performs unexpectedly, Aave 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 Aave will offset losses from the drop in Aave's long position.

The idea behind Ankr Network and Aave pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.