Correlation Between 21Shares Polkadot and Compagnie

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

Diversification Opportunities for 21Shares Polkadot and Compagnie

0.6

Correlation Coefficient

21Shares Polkadot  Compagnie

Poor diversification

The 3 months correlation between 21Shares and Compagnie is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Polkadot ETP and Compagnie de Chemins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Chemins 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Chemins has no effect on the direction of 21Shares Polkadot i.e., 21Shares Polkadot and Compagnie go up and down completely randomly.

Pair Corralation between 21Shares Polkadot and Compagnie

Assuming the 90 days trading horizon 21Shares Polkadot ETP is expected to generate 4.06 times more return on investment than Compagnie. However, 21Shares Polkadot is 4.06 times more volatile than Compagnie de Chemins. It trades about 0.08 of its potential returns per unit of risk. Compagnie de Chemins is currently generating about 0.14 per unit of risk. If you would invest  277.00  in 21Shares Polkadot ETP on September 21, 2024 and sell it today you would earn a total of  117.00  from holding 21Shares Polkadot ETP or generate 42.24% return on investment over 90 days.

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

21Shares Polkadot ETP  vs.  Compagnie de Chemins

21Shares Polkadot ETP

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Polkadot ETP are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 21Shares Polkadot sustained solid returns over the last few months and may actually be approaching a breakup point.

Compagnie de Chemins

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie de Chemins are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Compagnie reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 21Shares Polkadot and Compagnie

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

The idea behind 21Shares Polkadot ETP and Compagnie de Chemins 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.