Correlation Between IShares SP and 21Shares Avalanche

Can any of the company-specific risk be diversified away by investing in both IShares SP 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 SP 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 SP 500 and 21Shares Avalanche ETP, you can compare the effects of market volatilities on IShares SP 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 SP with a short position of 21Shares Avalanche. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares SP and 21Shares Avalanche.

Diversification Opportunities for IShares SP and 21Shares Avalanche

-0.03

Correlation Coefficient

IShares SP  21Shares Avalanche

Good diversification

The 3 months correlation between IShares and 21Shares is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding iShares SP 500 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 SP 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 SP 500 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 SP i.e., IShares SP and 21Shares Avalanche go up and down completely randomly.

Pair Corralation between IShares SP and 21Shares Avalanche

Assuming the 90 days trading horizon iShares SP 500 is expected to generate 0.13 times more return on investment than 21Shares Avalanche. However, iShares SP 500 is 7.95 times less risky than 21Shares Avalanche. It trades about -0.04 of its potential returns per unit of risk. 21Shares Avalanche ETP is currently generating about -0.12 per unit of risk. If you would invest  6,015  in iShares SP 500 on December 2, 2024 and sell it today you would lose (142.00) from holding iShares SP 500 or give up 2.36% of portfolio value over 90 days.

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

iShares SP 500  vs.  21Shares Avalanche ETP

iShares SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares SP is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

21Shares Avalanche ETP

Risk-Adjusted Performance

Very Weak

Over the last 90 days 21Shares Avalanche ETP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Pair Trading with IShares SP and 21Shares Avalanche

The main advantage of trading using opposite IShares SP and 21Shares Avalanche positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares SP 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 SP 500 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.