Correlation Between 21Shares Bytetree and Vanguard USD

Can any of the company-specific risk be diversified away by investing in both 21Shares Bytetree and Vanguard USD 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 Bytetree and Vanguard USD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 21Shares Bytetree BOLD and Vanguard USD Treasury, you can compare the effects of market volatilities on 21Shares Bytetree and Vanguard USD 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 Bytetree with a short position of Vanguard USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of 21Shares Bytetree and Vanguard USD.

Diversification Opportunities for 21Shares Bytetree and Vanguard USD

0.88

Correlation Coefficient

21Shares Bytetree  Vanguard USD

Very poor diversification

The 3 months correlation between 21Shares and Vanguard is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Bytetree BOLD and Vanguard USD Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard USD Treasury and 21Shares Bytetree 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 Bytetree BOLD are associated (or correlated) with Vanguard USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard USD Treasury has no effect on the direction of 21Shares Bytetree i.e., 21Shares Bytetree and Vanguard USD go up and down completely randomly.

Pair Corralation between 21Shares Bytetree and Vanguard USD

Assuming the 90 days trading horizon 21Shares Bytetree BOLD is expected to generate 3.01 times more return on investment than Vanguard USD. However, 21Shares Bytetree is 3.01 times more volatile than Vanguard USD Treasury. It trades about 0.07 of its potential returns per unit of risk. Vanguard USD Treasury is currently generating about 0.06 per unit of risk. If you would invest  3,043  in 21Shares Bytetree BOLD on September 28, 2024 and sell it today you would earn a total of  36.00  from holding 21Shares Bytetree BOLD or generate 1.18% return on investment over 90 days.

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

21Shares Bytetree BOLD  vs.  Vanguard USD Treasury

21Shares Bytetree BOLD

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Bytetree BOLD are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, 21Shares Bytetree showed solid returns over the last few months and may actually be approaching a breakup point.

Vanguard USD Treasury

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard USD Treasury are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Vanguard USD is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with 21Shares Bytetree and Vanguard USD

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

The idea behind 21Shares Bytetree BOLD and Vanguard USD Treasury 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.