Correlation Between Dash and AE

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

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

Diversification Opportunities for Dash and AE

0.96

Correlation Coefficient

Dash  AE

Almost no diversification

The 3 months correlation between Dash and AE is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Dash and AE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AE and Dash 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 Dash are associated (or correlated) with AE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AE has no effect on the direction of Dash i.e., Dash and AE go up and down completely randomly.

Pair Corralation between Dash and AE

Assuming the 90 days trading horizon Dash is expected to under-perform the AE. But the crypto coin apears to be less risky and, when comparing its historical volatility, Dash is 1.06 times less risky than AE. The crypto coin trades about -0.16 of its potential returns per unit of risk. The AE is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  3.35  in AE on December 27, 2024 and sell it today you would lose (1.46) from holding AE or give up 43.58% of portfolio value over 90 days.

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

Dash  vs.  AE

Dash

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dash 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 Dash shareholders.

AE

Risk-Adjusted Performance

Very Weak

Over the last 90 days AE 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 AE shareholders.

Pair Trading with Dash and AE

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

The idea behind Dash and AE 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.