Correlation Between Arweave and Aragon

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

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

Diversification Opportunities for Arweave and Aragon

0.9

Correlation Coefficient

Arweave  Aragon

Almost no diversification

The 3 months correlation between Arweave and Aragon is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Arweave and Aragon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aragon and Arweave 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 Arweave are associated (or correlated) with Aragon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aragon has no effect on the direction of Arweave i.e., Arweave and Aragon go up and down completely randomly.

Pair Corralation between Arweave and Aragon

Assuming the 90 days horizon Arweave is expected to generate 1.8 times more return on investment than Aragon. However, Arweave is 1.8 times more volatile than Aragon. It trades about 0.24 of its potential returns per unit of risk. Aragon is currently generating about 0.11 per unit of risk. If you would invest  894.00  in Arweave on January 26, 2024 and sell it today you would earn a total of  2,475  from holding Arweave or generate 276.85% return on investment over 90 days.

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

Arweave  vs.  Aragon

Arweave

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arweave are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Arweave exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aragon

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aragon are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Aragon exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arweave and Aragon

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

The idea behind Arweave and Aragon 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.