Correlation Between Spire Global and 21Shares Avalanche

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

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

Diversification Opportunities for Spire Global and 21Shares Avalanche

0.88

Correlation Coefficient

Spire Global  21Shares Avalanche

Very poor diversification

The 3 months correlation between Spire and 21Shares is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global 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 Spire Global 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 Spire Global 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 Spire Global i.e., Spire Global and 21Shares Avalanche go up and down completely randomly.

Pair Corralation between Spire Global and 21Shares Avalanche

Given the investment horizon of 90 days Spire Global is expected to generate 2.71 times less return on investment than 21Shares Avalanche. But when comparing it to its historical volatility, Spire Global is 1.81 times less risky than 21Shares Avalanche. It trades about 0.21 of its potential returns per unit of risk. 21Shares Avalanche ETP is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  478.00  in 21Shares Avalanche ETP on September 12, 2024 and sell it today you would earn a total of  315.00  from holding 21Shares Avalanche ETP or generate 65.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Spire Global  vs.  21Shares Avalanche ETP

Spire Global

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spire Global are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Spire Global reported solid returns over the last few months and may actually be approaching a breakup point.

21Shares Avalanche ETP

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Avalanche ETP are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, 21Shares Avalanche showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spire Global and 21Shares Avalanche

The main advantage of trading using opposite Spire Global and 21Shares Avalanche positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spire Global 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 Spire Global 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.