Correlation Between 21Shares Staking and 21Shares Arbitrum

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

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

Diversification Opportunities for 21Shares Staking and 21Shares Arbitrum

0.81

Correlation Coefficient

21Shares Staking  21Shares Arbitrum

Very poor diversification

The 3 months correlation between 21Shares and 21Shares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Staking Basket 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 21Shares Staking 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 Staking Basket 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 21Shares Staking i.e., 21Shares Staking and 21Shares Arbitrum go up and down completely randomly.

Pair Corralation between 21Shares Staking and 21Shares Arbitrum

Assuming the 90 days trading horizon 21Shares Staking Basket is expected to generate 0.49 times more return on investment than 21Shares Arbitrum. However, 21Shares Staking Basket is 2.05 times less risky than 21Shares Arbitrum. It trades about 0.2 of its potential returns per unit of risk. 21Shares Arbitrum ETP is currently generating about 0.08 per unit of risk. If you would invest  2,022  in 21Shares Staking Basket on October 27, 2024 and sell it today you would earn a total of  1,155  from holding 21Shares Staking Basket or generate 57.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

21Shares Staking Basket  vs.  21Shares Arbitrum ETP

21Shares Staking Basket

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Staking Basket are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, 21Shares Staking sustained solid returns over the last few months and may actually be approaching a breakup point.

21Shares Arbitrum ETP

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Arbitrum ETP are ranked lower than 6 (%) 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 21Shares Staking and 21Shares Arbitrum

The main advantage of trading using opposite 21Shares Staking and 21Shares Arbitrum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 21Shares Staking 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 21Shares Staking Basket 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.