Correlation Between 21Shares Polkadot and SPDR Dow

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

Diversification Opportunities for 21Shares Polkadot and SPDR Dow

-0.06

Correlation Coefficient

21Shares Polkadot  SPDR Dow

Good diversification

The 3 months correlation between 21Shares and SPDR is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Polkadot ETP and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones 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 SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of 21Shares Polkadot i.e., 21Shares Polkadot and SPDR Dow go up and down completely randomly.

Pair Corralation between 21Shares Polkadot and SPDR Dow

Assuming the 90 days trading horizon 21Shares Polkadot ETP is expected to under-perform the SPDR Dow. In addition to that, 21Shares Polkadot is 10.0 times more volatile than SPDR Dow Jones. It trades about -0.15 of its total potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.04 per unit of volatility. If you would invest  1,792  in SPDR Dow Jones on December 4, 2024 and sell it today you would earn a total of  27.00  from holding SPDR Dow Jones or generate 1.51% return on investment over 90 days.

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

21Shares Polkadot ETP  vs.  SPDR Dow Jones

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. In spite of abnormal performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

SPDR Dow Jones

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Dow Jones are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, SPDR Dow is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with 21Shares Polkadot and SPDR Dow

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

The idea behind 21Shares Polkadot ETP and SPDR Dow Jones 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 Stocks Directory module to find actively traded stocks across global markets.