Correlation Between Value8 NV and VanEck Polkadot

Can any of the company-specific risk be diversified away by investing in both Value8 NV and VanEck Polkadot 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 Value8 NV and VanEck Polkadot into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Value8 NV and VanEck Polkadot ETN, you can compare the effects of market volatilities on Value8 NV and VanEck Polkadot 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 Value8 NV with a short position of VanEck Polkadot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value8 NV and VanEck Polkadot.

Diversification Opportunities for Value8 NV and VanEck Polkadot

0.74

Correlation Coefficient

Value8 NV  VanEck Polkadot

Poor diversification

The 3 months correlation between Value8 and VanEck is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Value8 NV and VanEck Polkadot ETN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Polkadot ETN and Value8 NV 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 Value8 NV are associated (or correlated) with VanEck Polkadot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Polkadot ETN has no effect on the direction of Value8 NV i.e., Value8 NV and VanEck Polkadot go up and down completely randomly.

Pair Corralation between Value8 NV and VanEck Polkadot

Assuming the 90 days trading horizon Value8 NV is expected to generate 21.4 times less return on investment than VanEck Polkadot. But when comparing it to its historical volatility, Value8 NV is 10.41 times less risky than VanEck Polkadot. It trades about 0.1 of its potential returns per unit of risk. VanEck Polkadot ETN is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  183.00  in VanEck Polkadot ETN on September 17, 2024 and sell it today you would earn a total of  95.00  from holding VanEck Polkadot ETN or generate 51.91% return on investment over 90 days.

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

Value8 NV  vs.  VanEck Polkadot ETN

Value8 NV

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Value8 NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Value8 NV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

VanEck Polkadot ETN

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Polkadot ETN are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck Polkadot unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Value8 NV and VanEck Polkadot

The main advantage of trading using opposite Value8 NV and VanEck Polkadot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value8 NV position performs unexpectedly, VanEck Polkadot 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 Polkadot will offset losses from the drop in VanEck Polkadot's long position.

The idea behind Value8 NV and VanEck Polkadot ETN 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.