Correlation Between Lyxor Euro and 21Shares Polkadot

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Can any of the company-specific risk be diversified away by investing in both Lyxor Euro and 21Shares 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 Lyxor Euro and 21Shares Polkadot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor Euro Stoxx and 21Shares Polkadot ETP, you can compare the effects of market volatilities on Lyxor Euro and 21Shares 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 Lyxor Euro with a short position of 21Shares Polkadot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor Euro and 21Shares Polkadot.

Diversification Opportunities for Lyxor Euro and 21Shares Polkadot

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between Lyxor and 21Shares is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor Euro Stoxx and 21Shares Polkadot ETP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21Shares Polkadot ETP and Lyxor Euro 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 Lyxor Euro Stoxx are associated (or correlated) with 21Shares Polkadot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Shares Polkadot ETP has no effect on the direction of Lyxor Euro i.e., Lyxor Euro and 21Shares Polkadot go up and down completely randomly.

Pair Corralation between Lyxor Euro and 21Shares Polkadot

Assuming the 90 days trading horizon Lyxor Euro is expected to generate 29.12 times less return on investment than 21Shares Polkadot. But when comparing it to its historical volatility, Lyxor Euro Stoxx is 2.96 times less risky than 21Shares Polkadot. It trades about 0.01 of its potential returns per unit of risk. 21Shares Polkadot ETP is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  289.00  in 21Shares Polkadot ETP on September 19, 2024 and sell it today you would earn a total of  144.00  from holding 21Shares Polkadot ETP or generate 49.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.64%
ValuesDaily Returns

Lyxor Euro Stoxx  vs.  21Shares Polkadot ETP

 Performance 
       Timeline  
Lyxor Euro Stoxx 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lyxor Euro Stoxx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lyxor Euro is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
21Shares Polkadot ETP 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Polkadot ETP are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, 21Shares Polkadot showed solid returns over the last few months and may actually be approaching a breakup point.

Lyxor Euro and 21Shares Polkadot Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lyxor Euro and 21Shares Polkadot

The main advantage of trading using opposite Lyxor Euro and 21Shares Polkadot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor Euro position performs unexpectedly, 21Shares 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 21Shares Polkadot will offset losses from the drop in 21Shares Polkadot's long position.
The idea behind Lyxor Euro Stoxx and 21Shares Polkadot 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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