Correlation Between Swiss Leader and 21Shares Avalanche

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

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

Diversification Opportunities for Swiss Leader and 21Shares Avalanche

-0.45

Correlation Coefficient

Swiss Leader  21Shares Avalanche

Very good diversification

The 3 months correlation between Swiss and 21Shares is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price 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 Swiss Leader 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 Swiss Leader Price 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 Swiss Leader i.e., Swiss Leader and 21Shares Avalanche go up and down completely randomly.

Pair Corralation between Swiss Leader and 21Shares Avalanche

Assuming the 90 days trading horizon Swiss Leader Price is expected to under-perform the 21Shares Avalanche. But the index apears to be less risky and, when comparing its historical volatility, Swiss Leader Price is 11.03 times less risky than 21Shares Avalanche. The index trades about -0.02 of its potential returns per unit of risk. The 21Shares Avalanche ETP is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  348.00  in 21Shares Avalanche ETP on September 13, 2024 and sell it today you would earn a total of  530.00  from holding 21Shares Avalanche ETP or generate 152.3% return on investment over 90 days.

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

Swiss Leader Price  vs.  21Shares Avalanche ETP

Pair Trading with Swiss Leader and 21Shares Avalanche

The main advantage of trading using opposite Swiss Leader and 21Shares Avalanche positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Leader 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 Swiss Leader Price 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 Commodity Directory module to find actively traded commodities issued by global exchanges.