Correlation Between 21Shares Bitcoin and 21Shares Avalanche

Can any of the company-specific risk be diversified away by investing in both 21Shares Bitcoin and 21Shares Avalanche 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 21Shares Bitcoin and 21Shares Avalanche into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 21Shares Bitcoin ETP and 21Shares Avalanche ETP, you can compare the effects of market volatilities on 21Shares Bitcoin and 21Shares Avalanche 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 21Shares Bitcoin with a short position of 21Shares Avalanche. Check out your portfolio center. Please also check ongoing floating volatility patterns of 21Shares Bitcoin and 21Shares Avalanche.

Diversification Opportunities for 21Shares Bitcoin and 21Shares Avalanche

0.54

Correlation Coefficient

21Shares Bitcoin  21Shares Avalanche

Very weak diversification

The 3 months correlation between 21Shares and 21Shares is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Bitcoin ETP and 21Shares Avalanche ETP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21Shares Avalanche ETP and 21Shares Bitcoin 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 21Shares Bitcoin ETP are associated (or correlated) with 21Shares Avalanche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Shares Avalanche ETP has no effect on the direction of 21Shares Bitcoin i.e., 21Shares Bitcoin and 21Shares Avalanche go up and down completely randomly.

Pair Corralation between 21Shares Bitcoin and 21Shares Avalanche

Assuming the 90 days trading horizon 21Shares Bitcoin ETP is expected to generate 0.43 times more return on investment than 21Shares Avalanche. However, 21Shares Bitcoin ETP is 2.3 times less risky than 21Shares Avalanche. It trades about -0.13 of its potential returns per unit of risk. 21Shares Avalanche ETP is currently generating about -0.08 per unit of risk. If you would invest  3,352  in 21Shares Bitcoin ETP on December 4, 2024 and sell it today you would lose (295.00) from holding 21Shares Bitcoin ETP or give up 8.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

21Shares Bitcoin ETP  vs.  21Shares Avalanche ETP

21Shares Bitcoin ETP

Risk-Adjusted Performance

Very Weak

Over the last 90 days 21Shares Bitcoin ETP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, 21Shares Bitcoin is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

21Shares Avalanche ETP

Risk-Adjusted Performance

Very Weak

Over the last 90 days 21Shares Avalanche ETP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Pair Trading with 21Shares Bitcoin and 21Shares Avalanche

The main advantage of trading using opposite 21Shares Bitcoin and 21Shares Avalanche positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 21Shares Bitcoin position performs unexpectedly, 21Shares Avalanche 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 21Shares Avalanche will offset losses from the drop in 21Shares Avalanche's long position.

The idea behind 21Shares Bitcoin ETP and 21Shares Avalanche ETP 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.