Correlation Between VanEck Digital and IShares Ethereum

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

By analyzing existing cross correlation between VanEck Digital Transformation and iShares Ethereum Trust, you can compare the effects of market volatilities on VanEck Digital and IShares Ethereum 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 VanEck Digital with a short position of IShares Ethereum. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Digital and IShares Ethereum.

Diversification Opportunities for VanEck Digital and IShares Ethereum

0.91

Correlation Coefficient

VanEck Digital  IShares Ethereum

Almost no diversification

The 3 months correlation between VanEck and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Digital Transformation and iShares Ethereum Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Ethereum Trust and VanEck Digital 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 VanEck Digital Transformation are associated (or correlated) with IShares Ethereum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Ethereum Trust has no effect on the direction of VanEck Digital i.e., VanEck Digital and IShares Ethereum go up and down completely randomly.

Pair Corralation between VanEck Digital and IShares Ethereum

Given the investment horizon of 90 days VanEck Digital Transformation is expected to generate 1.04 times more return on investment than IShares Ethereum. However, VanEck Digital is 1.04 times more volatile than iShares Ethereum Trust. It trades about 0.07 of its potential returns per unit of risk. iShares Ethereum Trust is currently generating about 0.03 per unit of risk. If you would invest  962.00  in VanEck Digital Transformation on October 7, 2024 and sell it today you would earn a total of  697.00  from holding VanEck Digital Transformation or generate 72.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	51.1%
Values	Daily Returns

VanEck Digital Transformation  vs.  iShares Ethereum Trust

VanEck Digital Trans

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Digital Transformation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VanEck Digital reported solid returns over the last few months and may actually be approaching a breakup point.

iShares Ethereum Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Ethereum Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent technical indicators, IShares Ethereum sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VanEck Digital and IShares Ethereum

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

The idea behind VanEck Digital Transformation and iShares Ethereum Trust 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.