Avalanche Volatility
| AVAX Crypto | USD 24.51 0.97 4.12% |
Avalanche appears to be very risky, given 3 months investment horizon. Avalanche secures Sharpe Ratio (or Efficiency) of 0.0528, which signifies that digital coin had a 0.0528 % return per unit of standard deviation over the last 3 months. We have found twenty-nine technical indicators for Avalanche, which you can use to evaluate the volatility of coin. Please makes use of Avalanche's risk adjusted performance of 0.0904, and Mean Deviation of 3.86 to double-check if our risk estimates are consistent with your expectations. Key indicators related to Avalanche's volatility include:
90 Days Market Risk | Risk of Devaluation | 90 Days Economic Sensitivity |
Avalanche Crypto Coin volatility depicts how high the prices fluctuate around the mean (or its average) price. In other words, it is a statistical measure of the distribution of Avalanche daily returns, and it is calculated using variance and standard deviation. We also use Avalanche's beta, its sensitivity to the market, as well as its odds of financial distress to provide a more practical estimation of Avalanche volatility.
Avalanche |
Since volatility provides cryptocurrency investors with entry points to take advantage of coin prices, investors in projects such as Avalanche can benefit from it. Downward market volatility can be a perfect environment for traders who play the long game. Here, they may buy additional Avalanche shares at lower prices. For example, an investor can purchase Avalanche coin that has halved in price over a short period. This will lower your average cost per share, thereby improving your portfolio's performance when the markets normalize. Similarly, when the prices of Avalanche's crypto rise, investors can sell out and invest the proceeds in other coins with better opportunities. Investing in volatile markets will allow investors in evolving Defi or crypto projects such as Avalanche to generate better long-term returns.
Moving together with Avalanche Crypto Coin
Moving against Avalanche Crypto Coin
Avalanche Market Sensitivity And Downside Risk
Avalanche's beta coefficient measures the volatility of Avalanche crypto coin compared to the systematic risk of the entire market represented by your selected benchmark. In mathematical terms, beta represents the slope of the line through a regression of data points where each of these points represents Avalanche crypto coin's returns against your selected market. In other words, Avalanche's beta of -0.63 provides an investor with an approximation of how much risk Avalanche crypto coin can potentially add to one of your existing portfolios. Avalanche shows above-average downside volatility for the selected time horizon. We advise cryptocurrency investors to inspect Avalanche further and ensure that all market timing and asset allocation strategies are consistent with the estimation of Avalanche future alpha. Please note that many cryptocurrencies are speculative and subject to artificial price hype. Ensure you understand the upside potential and downside risk of investing in Avalanche. We encourage all cryptocurrency investors to look for signals such as email spams, message board hypes, claims of breakthroughs, volume upswings, sudden news releases, promotions that are not reported, or demotions released before the public announcements. Please also check the biographies and work history of current and past project contributors before investing in high-volatility crypto coins. You can indeed make money on Avalanche if you perfectly time your entry and exit. However, remember that cryptos that have been the subject of artificial hype usually cannot maintain its increased price for more than a few days. The price of a promoted high-volatility instrument will almost always revert. The only way to increase coin holder value is through legitimate performance analysis backed up by solid fundamentals of the project the coin represents. Understanding different market volatility trends often help investors time the market. Properly using volatility indicators enable traders to measure Avalanche's crypto coin risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact Avalanche's price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different cryptos as prices fall or investing in DeFi projects.
3 Months Beta |Analyze Avalanche Demand TrendCheck current 90 days Avalanche correlation with market (Dow Jones Industrial)Avalanche Beta |
Avalanche standard deviation measures the daily dispersion of prices over your selected time horizon relative to its mean. A typical volatile entity has a high standard deviation, while the deviation of a stable instrument is usually low. As a downside, the standard deviation calculates all uncertainty as risk, even when it is in your favor, such as above-average returns.
Standard Deviation | 4.78 |
It is essential to understand the difference between upside risk (as represented by Avalanche's standard deviation) and the downside risk, which can be measured by semi-deviation or downside deviation of Avalanche's daily returns or price. Since the actual investment returns on holding a position in avalanche crypto coin tend to have a non-normal distribution, there will be different probabilities for losses than for gains. The likelihood of losses is reflected in the downside risk of an investment in Avalanche.
Avalanche Crypto Coin Volatility Analysis
Volatility refers to the frequency at which Avalanche crypto price increases or decreases within a specified period. These fluctuations usually indicate the level of risk that's associated with Avalanche's price changes. Investors will then calculate the volatility of Avalanche's crypto coin to predict their future moves. A crypto that has erratic price changes quickly hits new highs, and lows are considered highly volatile. A crypto coin with relatively stable price changes has low volatility. A highly volatile crypto is riskier, but the risk cuts both ways. Investing in highly volatile security can either be highly successful, or you may experience significant failure. There are two main types of Avalanche's volatility:
Historical Volatility
This type of crypto volatility measures Avalanche's fluctuations based on previous trends. It's commonly used to predict Avalanche's future behavior based on its past. However, it cannot conclusively determine the future direction of the crypto coin.Implied Volatility
This type of volatility provides a positive outlook on future price fluctuations for Avalanche's current market price. This means that the crypto will return to its initially predicted market price. This type of volatility can be derived from derivative instruments written on Avalanche's to be redeemed at a future date.Transformation |
The output start index for this execution was zero with a total number of output elements of sixty-one. Avalanche Average Price is the average of the sum of open, high, low and close daily prices of a bar. It can be used to smooth an indicator that normally takes just the closing price as input.
Avalanche Projected Return Density Against Market
Assuming the 90 days trading horizon Avalanche has a beta of -0.6315 . This suggests as returns on the benchmark increase, returns on holding Avalanche are expected to decrease at a much lower rate. During a bear market, however, Avalanche is likely to outperform the market.Most traded cryptocurrencies are subject to two types of risk - systematic (i.e., market) and unsystematic (i.e., nonmarket or coin-specific or project-specific) risk. Unsystematic risk is the risk that events specific to Avalanche project will adversely affect the coin's price. This type of risk can be diversified away by owning several different digital assets on different exchanges whose coin prices have shown a small correlation to each other. On the other hand, systematic risk is the risk that Avalanche's price will be affected by overall cryptocurrency market movements and cannot be diversified away. So, no matter how many positions you have, you cannot eliminate market risk. However, you can measure a Avalanche crypto's historical response to market movements and buy it if you are comfortable with its volatility direction. Beta and standard deviation are two commonly used measures to help you make the right decision.
Avalanche has an alpha of 0.5081, implying that it can generate a 0.51 percent excess return over Dow Jones Industrial after adjusting for the inherited market risk (beta). Predicted Return Density |
| Returns |
Avalanche Crypto Coin Risk Measures
Assuming the 90 days trading horizon the coefficient of variation of Avalanche is 1893.34. The daily returns are distributed with a variance of 22.81 and standard deviation of 4.78. The mean deviation of Avalanche is currently at 3.77. For similar time horizon, the selected benchmark (Dow Jones Industrial) has volatility of 0.
α | Alpha over Dow Jones | 0.51 | |
β | Beta against Dow Jones | -0.63 | |
σ | Overall volatility | 4.78 | |
Ir | Information ratio | 0.06 |
Avalanche Crypto Coin Return Volatility
Avalanche historical daily return volatility represents how much of Avalanche crypto's daily returns swing around its mean - it is a statistical measure of its dispersion of returns. Keep in mind that cryptocurrencies such as Avalanche have only been around for a short time and are still in the price discovery phase. This means that prices will continue to change as investors and governments work through the initial concerns until prices stabilize, provided a stable point can be reached. Avalanche accepts 4.7762% volatility on return distribution over the 90 days horizon. By contrast, Dow Jones Industrial accepts 0.7804% volatility on return distribution over the 90 days horizon. Performance |
| Timeline |
About Avalanche Volatility
Volatility is a rate at which the price of Avalanche or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Avalanche may increase or decrease. In other words, similar to Avalanche's beta indicator, it measures the risk of Avalanche and helps estimate the fluctuations that may happen in a short period of time. So if prices of Avalanche fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility.
Please read more on our technical analysis page.3 ways to utilize Avalanche's volatility to invest better
Higher Avalanche's crypto volatility means that the price of its stock is changing rapidly and unpredictably, while lower stock volatility indicates that the price of Avalanche crypto is relatively stable. Investors and traders use stock volatility as an indicator of risk and potential reward, as stocks with higher volatility can offer the potential for more significant returns but also come with a greater risk of losses. Avalanche crypto volatility can provide helpful information for making investment decisions in the following ways:- Measuring Risk: Volatility can be used as a measure of risk, which can help you determine the potential fluctuations in the value of Avalanche investment. A higher volatility means higher risk and potentially larger changes in value.
- Identifying Opportunities: High volatility in Avalanche's crypto can indicate that there is potential for significant price movements, either up or down, which could present investment opportunities.
- Diversification: Understanding how the volatility of Avalanche's crypto relates to your other investments can help you create a well-diversified portfolio of assets with varying levels of risk.
Avalanche Investment Opportunity
Avalanche has a volatility of 4.78 and is 6.13 times more volatile than Dow Jones Industrial. 42 percent of all equities and portfolios are less risky than Avalanche. You can use Avalanche to enhance the returns of your portfolios. The crypto coin experiences a very speculative upward sentiment. Check odds of Avalanche to be traded at $30.64 in 90 days.Good diversification
The correlation between Avalanche and DJI is -0.12 (i.e., Good diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding Avalanche and DJI in the same portfolio, assuming nothing else is changed. Please note that Avalanche is a digital instrument and cryptocurrency exchanges were notoriously volatile since the beginning of their establishment.
Avalanche Additional Risk Indicators
The analysis of Avalanche's secondary risk indicators is one of the essential steps in making a buy or sell decision. The process involves identifying the amount of risk involved in Avalanche's investment and either accepting that risk or mitigating it. Along with some common measures of Avalanche crypto coin's risk such as standard deviation, beta, or value at risk, we also provide a set of secondary indicators that can assist in the individual investment decision or help in hedging the risk of your existing portfolios.
| Risk Adjusted Performance | 0.0904 | |||
| Market Risk Adjusted Performance | (0.66) | |||
| Mean Deviation | 3.86 | |||
| Semi Deviation | 3.74 | |||
| Downside Deviation | 4.03 | |||
| Coefficient Of Variation | 1131.72 | |||
| Standard Deviation | 4.89 |
Please note, the risk measures we provide can be used independently or collectively to perform a risk assessment. When comparing two potential crypto coins, we recommend comparing similar cryptos with homogenous growth potential and valuation from related markets to determine which investment holds the most risk.
Avalanche Suggested Diversification Pairs
Pair trading is one of the very effective strategies used by professional day traders and hedge funds capitalizing on short-time and mid-term market inefficiencies. The approach is based on the fact that the ratio of prices of two correlating shares is long-term stable and oscillates around the average value. If the correlation ratio comes outside the common area, you can speculate with a high success rate that the ratio will return to the mean value and collect a profit.
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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Avalanche as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Avalanche's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Avalanche's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Avalanche.
When determining whether Avalanche offers a strong return on investment in its stock, a comprehensive analysis is essential. The process typically begins with a thorough review of Avalanche's financial statements, including income statements, balance sheets, and cash flow statements, to assess its financial health. Key financial ratios are used to gauge profitability, efficiency, and growth potential of Avalanche Crypto. Check out Trending Equities to better understand how to build diversified portfolios, which includes a position in Avalanche. Also, note that the market value of any cryptocurrency could be closely tied with the direction of predictive economic indicators such as signals in board of governors. You can also try the Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.