Correlation Between 21Shares Polkadot and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both 21Shares Polkadot and Xtrackers MSCI 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 Polkadot and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 21Shares Polkadot ETP and Xtrackers MSCI USA, you can compare the effects of market volatilities on 21Shares Polkadot and Xtrackers MSCI 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 Polkadot with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of 21Shares Polkadot and Xtrackers MSCI.
Diversification Opportunities for 21Shares Polkadot and Xtrackers MSCI
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between 21Shares and Xtrackers is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Polkadot ETP and Xtrackers MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI USA and 21Shares Polkadot 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 Polkadot ETP are associated (or correlated) with Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI USA has no effect on the direction of 21Shares Polkadot i.e., 21Shares Polkadot and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between 21Shares Polkadot and Xtrackers MSCI
Assuming the 90 days trading horizon 21Shares Polkadot ETP is expected to under-perform the Xtrackers MSCI. In addition to that, 21Shares Polkadot is 1.54 times more volatile than Xtrackers MSCI USA. It trades about -0.09 of its total potential returns per unit of risk. Xtrackers MSCI USA is currently generating about 0.26 per unit of volatility. If you would invest 2,613 in Xtrackers MSCI USA on October 8, 2024 and sell it today you would earn a total of 624.00 from holding Xtrackers MSCI USA or generate 23.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
21Shares Polkadot ETP vs. Xtrackers MSCI USA
Performance |
| Timeline |
| 21Shares Polkadot ETP |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Xtrackers MSCI USA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
21Shares Polkadot and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 21Shares Polkadot and Xtrackers MSCI
The main advantage of trading using opposite 21Shares Polkadot and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 21Shares Polkadot position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI's long position.The idea behind 21Shares Polkadot ETP and Xtrackers MSCI USA 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.Check out your portfolio center.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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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