Correlation Between IShares VII and VanEck Crypto

Can any of the company-specific risk be diversified away by investing in both IShares VII and VanEck Crypto 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 VII and VanEck Crypto into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares VII PLC and VanEck Crypto and, you can compare the effects of market volatilities on IShares VII and VanEck Crypto 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 VII with a short position of VanEck Crypto. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and VanEck Crypto.

Diversification Opportunities for IShares VII and VanEck Crypto

0.37

Correlation Coefficient

IShares VII  VanEck Crypto

Weak diversification

The 3 months correlation between IShares and VanEck is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII PLC and VanEck Crypto and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Crypto and IShares VII 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 VII PLC are associated (or correlated) with VanEck Crypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Crypto has no effect on the direction of IShares VII i.e., IShares VII and VanEck Crypto go up and down completely randomly.

Pair Corralation between IShares VII and VanEck Crypto

Assuming the 90 days trading horizon IShares VII is expected to generate 10.26 times less return on investment than VanEck Crypto. But when comparing it to its historical volatility, iShares VII PLC is 4.4 times less risky than VanEck Crypto. It trades about 0.09 of its potential returns per unit of risk. VanEck Crypto and is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  657.00  in VanEck Crypto and on September 17, 2024 and sell it today you would earn a total of  544.00  from holding VanEck Crypto and or generate 82.8% return on investment over 90 days.

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

iShares VII PLC  vs.  VanEck Crypto and

iShares VII PLC

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares VII PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, IShares VII may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VanEck Crypto

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Crypto and are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, VanEck Crypto reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares VII and VanEck Crypto

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

The idea behind iShares VII PLC and VanEck Crypto and 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.