Correlation Between 21Shares Polkadot and IShares SMIM

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

Diversification Opportunities for 21Shares Polkadot and IShares SMIM

-0.51

Correlation Coefficient

21Shares Polkadot  IShares SMIM

Excellent diversification

The 3 months correlation between 21Shares and IShares is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Polkadot ETP and iShares SMIM ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SMIM ETF 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 IShares SMIM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SMIM ETF has no effect on the direction of 21Shares Polkadot i.e., 21Shares Polkadot and IShares SMIM go up and down completely randomly.

Pair Corralation between 21Shares Polkadot and IShares SMIM

Assuming the 90 days trading horizon 21Shares Polkadot ETP is expected to generate 11.58 times more return on investment than IShares SMIM. However, 21Shares Polkadot is 11.58 times more volatile than iShares SMIM ETF. It trades about 0.19 of its potential returns per unit of risk. iShares SMIM ETF is currently generating about -0.02 per unit of risk. If you would invest  212.00  in 21Shares Polkadot ETP on September 17, 2024 and sell it today you would earn a total of  232.00  from holding 21Shares Polkadot ETP or generate 109.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

21Shares Polkadot ETP  vs.  iShares SMIM ETF

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. 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.

iShares SMIM ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares SMIM ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares SMIM 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 IShares SMIM

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

The idea behind 21Shares Polkadot ETP and iShares SMIM ETF 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.