Correlation Between 21Shares Crypto and 21Shares Polkadot

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

Diversification Opportunities for 21Shares Crypto and 21Shares Polkadot

0.47

Correlation Coefficient

21Shares Crypto  21Shares Polkadot

Very weak diversification

The 3 months correlation between 21Shares and 21Shares is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Crypto Basket and 21Shares Polkadot ETP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21Shares Polkadot ETP 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 21Shares Polkadot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Shares Polkadot ETP has no effect on the direction of 21Shares Crypto i.e., 21Shares Crypto and 21Shares Polkadot go up and down completely randomly.

Pair Corralation between 21Shares Crypto and 21Shares Polkadot

Assuming the 90 days trading horizon 21Shares Crypto Basket is expected to generate 0.44 times more return on investment than 21Shares Polkadot. However, 21Shares Crypto Basket is 2.25 times less risky than 21Shares Polkadot. It trades about -0.07 of its potential returns per unit of risk. 21Shares Polkadot ETP is currently generating about -0.13 per unit of risk. If you would invest  3,169  in 21Shares Crypto Basket on November 29, 2024 and sell it today you would lose (464.00) from holding 21Shares Crypto Basket or give up 14.64% of portfolio value over 90 days.

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

21Shares Crypto Basket  vs.  21Shares Polkadot ETP

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 March 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

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. Despite weak performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with 21Shares Crypto and 21Shares Polkadot

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

The idea behind 21Shares Crypto Basket and 21Shares Polkadot 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.