Correlation Between 21Shares Polkadot and 21Shares Tezos

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

Diversification Opportunities for 21Shares Polkadot and 21Shares Tezos

0.98

Correlation Coefficient

21Shares Polkadot  21Shares Tezos

Almost no diversification

The 3 months correlation between 21Shares and 21Shares is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Polkadot ETP and 21Shares Tezos staking in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21Shares Tezos staking 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 21Shares Tezos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Shares Tezos staking has no effect on the direction of 21Shares Polkadot i.e., 21Shares Polkadot and 21Shares Tezos go up and down completely randomly.

Pair Corralation between 21Shares Polkadot and 21Shares Tezos

Assuming the 90 days trading horizon 21Shares Polkadot ETP is expected to under-perform the 21Shares Tezos. In addition to that, 21Shares Polkadot is 1.39 times more volatile than 21Shares Tezos staking. It trades about -0.15 of its total potential returns per unit of risk. 21Shares Tezos staking is currently generating about -0.11 per unit of volatility. If you would invest  974.00  in 21Shares Tezos staking on October 7, 2024 and sell it today you would lose (145.00) from holding 21Shares Tezos staking or give up 14.89% of portfolio value over 90 days.

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

21Shares Polkadot ETP  vs.  21Shares Tezos staking

21Shares Polkadot ETP

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Polkadot ETP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, 21Shares Polkadot showed solid returns over the last few months and may actually be approaching a breakup point.

21Shares Tezos staking

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Tezos staking are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, 21Shares Tezos showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 21Shares Polkadot and 21Shares Tezos

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

The idea behind 21Shares Polkadot ETP and 21Shares Tezos staking 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.