Correlation Between Avalanche and BitMart Token

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

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

Diversification Opportunities for Avalanche and BitMart Token

0.44

Correlation Coefficient

Avalanche  BitMart Token

Very weak diversification

The 3 months correlation between Avalanche and BitMart is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Avalanche and BitMart Token in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BitMart Token and Avalanche 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 Avalanche are associated (or correlated) with BitMart Token. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BitMart Token has no effect on the direction of Avalanche i.e., Avalanche and BitMart Token go up and down completely randomly.

Pair Corralation between Avalanche and BitMart Token

Assuming the 90 days trading horizon Avalanche is expected to under-perform the BitMart Token. In addition to that, Avalanche is 1.1 times more volatile than BitMart Token. It trades about -0.26 of its total potential returns per unit of risk. BitMart Token is currently generating about 0.1 per unit of volatility. If you would invest  31.00  in BitMart Token on January 25, 2024 and sell it today you would earn a total of  3.00  from holding BitMart Token or generate 9.68% return on investment over 90 days.

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

Avalanche  vs.  BitMart Token

Avalanche

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Avalanche are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Avalanche exhibited solid returns over the last few months and may actually be approaching a breakup point.

BitMart Token

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BitMart Token are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, BitMart Token exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avalanche and BitMart Token

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

The idea behind Avalanche and BitMart Token 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.