Correlation Between Aave and 1inch

Can any of the company-specific risk be diversified away by investing in both Aave and 1inch 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 Aave and 1inch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aave and 1inch, you can compare the effects of market volatilities on Aave and 1inch 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 Aave with a short position of 1inch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aave and 1inch.

Diversification Opportunities for Aave and 1inch

0.89

Correlation Coefficient

Aave  1inch

Very poor diversification

The 3 months correlation between Aave and 1inch is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Aave and 1inch in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1inch and Aave 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 Aave are associated (or correlated) with 1inch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1inch has no effect on the direction of Aave i.e., Aave and 1inch go up and down completely randomly.

Pair Corralation between Aave and 1inch

Assuming the 90 days trading horizon Aave is expected to generate 1.42 times more return on investment than 1inch. However, Aave is 1.42 times more volatile than 1inch. It trades about -0.13 of its potential returns per unit of risk. 1inch is currently generating about -0.23 per unit of risk. If you would invest  30,817  in Aave on December 30, 2024 and sell it today you would lose (14,127) from holding Aave or give up 45.84% of portfolio value over 90 days.

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

Aave  vs.  1inch

Aave

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aave has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Aave shareholders.

1inch

Risk-Adjusted Performance

Very Weak

Over the last 90 days 1inch has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for 1inch shareholders.

Pair Trading with Aave and 1inch

The main advantage of trading using opposite Aave and 1inch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aave position performs unexpectedly, 1inch 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 1inch will offset losses from the drop in 1inch's long position.

The idea behind Aave and 1inch 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.