Correlation Between 21Shares Polkadot and UBS ETF

Can any of the company-specific risk be diversified away by investing in both 21Shares Polkadot and UBS ETF 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 UBS ETF 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 UBS ETF MSCI, you can compare the effects of market volatilities on 21Shares Polkadot and UBS ETF 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 UBS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of 21Shares Polkadot and UBS ETF.

Diversification Opportunities for 21Shares Polkadot and UBS ETF

-0.51

Correlation Coefficient

21Shares Polkadot  UBS ETF

Excellent diversification

The 3 months correlation between 21Shares and UBS is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Polkadot ETP and UBS ETF MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF MSCI 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 UBS ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETF MSCI has no effect on the direction of 21Shares Polkadot i.e., 21Shares Polkadot and UBS ETF go up and down completely randomly.

Pair Corralation between 21Shares Polkadot and UBS ETF

Assuming the 90 days trading horizon 21Shares Polkadot ETP is expected to generate 10.51 times more return on investment than UBS ETF. However, 21Shares Polkadot is 10.51 times more volatile than UBS ETF MSCI. It trades about 0.17 of its potential returns per unit of risk. UBS ETF MSCI is currently generating about -0.05 per unit of risk. If you would invest  212.00  in 21Shares Polkadot ETP on September 12, 2024 and sell it today you would earn a total of  180.00  from holding 21Shares Polkadot ETP or generate 84.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

21Shares Polkadot ETP  vs.  UBS ETF MSCI

21Shares Polkadot ETP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Polkadot ETP are ranked lower than 13 (%) 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.

UBS ETF MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS ETF MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UBS ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 21Shares Polkadot and UBS ETF

The main advantage of trading using opposite 21Shares Polkadot and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 21Shares Polkadot position performs unexpectedly, UBS ETF 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 UBS ETF will offset losses from the drop in UBS ETF's long position.

The idea behind 21Shares Polkadot ETP and UBS ETF MSCI 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.