Correlation Between Avalanche and CEL
Can any of the company-specific risk be diversified away by investing in both Avalanche and CEL 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 CEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avalanche and CEL, you can compare the effects of market volatilities on Avalanche and CEL 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 CEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avalanche and CEL.
Diversification Opportunities for Avalanche and CEL
Poor diversification
The 3 months correlation between Avalanche and CEL is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Avalanche and CEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEL 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 CEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEL has no effect on the direction of Avalanche i.e., Avalanche and CEL go up and down completely randomly.
Pair Corralation between Avalanche and CEL
Assuming the 90 days trading horizon Avalanche is expected to generate 0.7 times more return on investment than CEL. However, Avalanche is 1.43 times less risky than CEL. It trades about 0.07 of its potential returns per unit of risk. CEL is currently generating about 0.01 per unit of risk. If you would invest 3,225 in Avalanche on January 25, 2024 and sell it today you would earn a total of 591.00 from holding Avalanche or generate 18.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Avalanche vs. CEL
Performance |
Timeline |
Avalanche |
CEL |
Avalanche and CEL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Avalanche and CEL
The main advantage of trading using opposite Avalanche and CEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avalanche position performs unexpectedly, CEL 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 CEL will offset losses from the drop in CEL's long position.The idea behind Avalanche and CEL 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.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
FinTech Suite Use AI to screen and filter profitable investment opportunities |