Correlation Between 21Shares Polkadot and BNP Paribas

Can any of the company-specific risk be diversified away by investing in both 21Shares Polkadot and BNP Paribas 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 BNP Paribas 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 BNP Paribas Easy, you can compare the effects of market volatilities on 21Shares Polkadot and BNP Paribas 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 BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of 21Shares Polkadot and BNP Paribas.

Diversification Opportunities for 21Shares Polkadot and BNP Paribas

0.4

Correlation Coefficient

21Shares Polkadot  BNP Paribas

Very weak diversification

The 3 months correlation between 21Shares and BNP is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Polkadot ETP and BNP Paribas Easy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Easy 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 BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas Easy has no effect on the direction of 21Shares Polkadot i.e., 21Shares Polkadot and BNP Paribas go up and down completely randomly.

Pair Corralation between 21Shares Polkadot and BNP Paribas

Assuming the 90 days trading horizon 21Shares Polkadot ETP is expected to under-perform the BNP Paribas. In addition to that, 21Shares Polkadot is 6.65 times more volatile than BNP Paribas Easy. It trades about -0.1 of its total potential returns per unit of risk. BNP Paribas Easy is currently generating about -0.07 per unit of volatility. If you would invest  2,375  in BNP Paribas Easy on December 21, 2024 and sell it today you would lose (103.00) from holding BNP Paribas Easy or give up 4.34% of portfolio value over 90 days.

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

21Shares Polkadot ETP  vs.  BNP Paribas Easy

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.

BNP Paribas Easy

Risk-Adjusted Performance

Very Weak

Over the last 90 days BNP Paribas Easy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, BNP Paribas is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 21Shares Polkadot and BNP Paribas

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

The idea behind 21Shares Polkadot ETP and BNP Paribas Easy 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.