Correlation Between IShares Core and 21Shares Avalanche

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

By analyzing existing cross correlation between iShares Core SP and 21Shares Avalanche ETP, you can compare the effects of market volatilities on IShares Core and 21Shares Avalanche 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 IShares Core with a short position of 21Shares Avalanche. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and 21Shares Avalanche.

Diversification Opportunities for IShares Core and 21Shares Avalanche

0.77

Correlation Coefficient

IShares Core  21Shares Avalanche

Poor diversification

The 3 months correlation between IShares and 21Shares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and 21Shares Avalanche ETP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21Shares Avalanche ETP and IShares Core 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 iShares Core SP are associated (or correlated) with 21Shares Avalanche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Shares Avalanche ETP has no effect on the direction of IShares Core i.e., IShares Core and 21Shares Avalanche go up and down completely randomly.

Pair Corralation between IShares Core and 21Shares Avalanche

Assuming the 90 days trading horizon IShares Core is expected to generate 10.68 times less return on investment than 21Shares Avalanche. But when comparing it to its historical volatility, iShares Core SP is 7.48 times less risky than 21Shares Avalanche. It trades about 0.21 of its potential returns per unit of risk. 21Shares Avalanche ETP is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  312.00  in 21Shares Avalanche ETP on September 5, 2024 and sell it today you would earn a total of  523.00  from holding 21Shares Avalanche ETP or generate 167.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

iShares Core SP  vs.  21Shares Avalanche ETP

iShares Core SP

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

21Shares Avalanche ETP

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Avalanche ETP are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, 21Shares Avalanche showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Core and 21Shares Avalanche

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

The idea behind iShares Core SP and 21Shares Avalanche ETP 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.