Correlation Between 21Shares Crypto and Lyxor UCITS

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

By analyzing existing cross correlation between 21Shares Crypto Basket and Lyxor UCITS Japan, you can compare the effects of market volatilities on 21Shares Crypto and Lyxor UCITS 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 Crypto with a short position of Lyxor UCITS. Check out your portfolio center. Please also check ongoing floating volatility patterns of 21Shares Crypto and Lyxor UCITS.

Diversification Opportunities for 21Shares Crypto and Lyxor UCITS

-0.14

Correlation Coefficient

21Shares Crypto  Lyxor UCITS

Good diversification

The 3 months correlation between 21Shares and Lyxor is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Crypto Basket and Lyxor UCITS Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor UCITS Japan and 21Shares Crypto 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 Crypto Basket are associated (or correlated) with Lyxor UCITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor UCITS Japan has no effect on the direction of 21Shares Crypto i.e., 21Shares Crypto and Lyxor UCITS go up and down completely randomly.

Pair Corralation between 21Shares Crypto and Lyxor UCITS

Assuming the 90 days trading horizon 21Shares Crypto Basket is expected to under-perform the Lyxor UCITS. In addition to that, 21Shares Crypto is 6.24 times more volatile than Lyxor UCITS Japan. It trades about -0.06 of its total potential returns per unit of risk. Lyxor UCITS Japan is currently generating about -0.01 per unit of volatility. If you would invest  16,813  in Lyxor UCITS Japan on December 2, 2024 and sell it today you would lose (82.00) from holding Lyxor UCITS Japan or give up 0.49% of portfolio value over 90 days.

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

21Shares Crypto Basket  vs.  Lyxor UCITS Japan

21Shares Crypto Basket

Risk-Adjusted Performance

Very Weak

Over the last 90 days 21Shares Crypto Basket has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Etf's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

Lyxor UCITS Japan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lyxor UCITS Japan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lyxor UCITS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 21Shares Crypto and Lyxor UCITS

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

The idea behind 21Shares Crypto Basket and Lyxor UCITS Japan 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 Transaction History module to view history of all your transactions and understand their impact on performance.