Correlation Between 21Shares Polkadot and Lyxor CAC

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

By analyzing existing cross correlation between 21Shares Polkadot ETP and Lyxor CAC 40, you can compare the effects of market volatilities on 21Shares Polkadot and Lyxor CAC 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 Polkadot with a short position of Lyxor CAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of 21Shares Polkadot and Lyxor CAC.

Diversification Opportunities for 21Shares Polkadot and Lyxor CAC

-0.66

Correlation Coefficient

21Shares Polkadot  Lyxor CAC

Excellent diversification

The 3 months correlation between 21Shares and Lyxor is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Polkadot ETP and Lyxor CAC 40 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor CAC 40 and 21Shares Polkadot 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 Polkadot ETP are associated (or correlated) with Lyxor CAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor CAC 40 has no effect on the direction of 21Shares Polkadot i.e., 21Shares Polkadot and Lyxor CAC go up and down completely randomly.

Pair Corralation between 21Shares Polkadot and Lyxor CAC

Assuming the 90 days trading horizon 21Shares Polkadot ETP is expected to under-perform the Lyxor CAC. In addition to that, 21Shares Polkadot is 9.11 times more volatile than Lyxor CAC 40. It trades about -0.1 of its total potential returns per unit of risk. Lyxor CAC 40 is currently generating about 0.24 per unit of volatility. If you would invest  3,473  in Lyxor CAC 40 on December 2, 2024 and sell it today you would earn a total of  419.00  from holding Lyxor CAC 40 or generate 12.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

21Shares Polkadot ETP  vs.  Lyxor CAC 40

21Shares Polkadot ETP

Risk-Adjusted Performance

Very Weak

Over the last 90 days 21Shares Polkadot ETP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Lyxor CAC 40

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor CAC 40 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lyxor CAC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with 21Shares Polkadot and Lyxor CAC

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

The idea behind 21Shares Polkadot ETP and Lyxor CAC 40 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.