Correlation Between LG Russell and 21Shares Arbitrum

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

By analyzing existing cross correlation between LG Russell 2000 and 21Shares Arbitrum ETP, you can compare the effects of market volatilities on LG Russell and 21Shares Arbitrum 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 LG Russell with a short position of 21Shares Arbitrum. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Russell and 21Shares Arbitrum.

Diversification Opportunities for LG Russell and 21Shares Arbitrum

0.71

Correlation Coefficient

LG Russell  21Shares Arbitrum

Poor diversification

The 3 months correlation between RTWO and 21Shares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding LG Russell 2000 and 21Shares Arbitrum ETP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21Shares Arbitrum ETP and LG Russell 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 LG Russell 2000 are associated (or correlated) with 21Shares Arbitrum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Shares Arbitrum ETP has no effect on the direction of LG Russell i.e., LG Russell and 21Shares Arbitrum go up and down completely randomly.

Pair Corralation between LG Russell and 21Shares Arbitrum

Assuming the 90 days trading horizon LG Russell is expected to generate 1.08 times less return on investment than 21Shares Arbitrum. But when comparing it to its historical volatility, LG Russell 2000 is 5.35 times less risky than 21Shares Arbitrum. It trades about 0.05 of its potential returns per unit of risk. 21Shares Arbitrum ETP is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,003  in 21Shares Arbitrum ETP on October 12, 2024 and sell it today you would lose (609.00) from holding 21Shares Arbitrum ETP or give up 30.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	55.58%
Values	Daily Returns

LG Russell 2000  vs.  21Shares Arbitrum ETP

LG Russell 2000

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LG Russell 2000 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, LG Russell is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

21Shares Arbitrum ETP

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Arbitrum ETP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, 21Shares Arbitrum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LG Russell and 21Shares Arbitrum

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

The idea behind LG Russell 2000 and 21Shares Arbitrum 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.