Pair is still diverging, but the momentum is slowing. A potential reversal candidate.
Regime: PEAK_DIVERGENCE (medium confidence)
Correlation: 0.62 · Cointegrated: yes
Z-score: 1.21 entry / 1.71 rolling
Half-life 3.4h · Hurst 0.91 · Hedge ratio 0.36
Pair volatility: 42.31%
Backtest: 81.82% win · Sharpe 2.40 · 1.84% return · 2.66% max drawdown
Pair Analysis: Long W / Short AVAX
- Roll Z-Score: 1.71 (1h) / 1.54 (4h)
- Correlation: 0.62 (1h)
- Hedge Ratio: 0.359 (4h)
- Cointegration: True (1h/4h)
Analysis:
- Directional Alignment: The pair is currently "rich" (positive Z-score), meaning AVAX is trading at a premium relative to W. Your stated direction (Long W / Short AVAX) is quant-optimally aligned with this mean-reversion signal, as it effectively bets on the spread narrowing by shorting the relatively expensive leg (AVAX) and longing the relatively cheap one (W).
- Sentiment: Both assets face bearish headwinds. W is pressured by significant upcoming supply unlocks and a lack of retail momentum. AVAX is also experiencing near-term supply pressure and technical weakness, with heavy short-selling activity.
- Risk Note: While the Z-score suggests a mean-reversion opportunity, the bearish sentiment on both legs implies this is a "relative value" play rather than a directional bet. The 1h Z-score is ~1.3h old; ensure you check live price action, as a rapid divergence in either asset could invalidate the current Z-score snapshot.
W
AVAX