Correlation Between IShares Core and 21Shares Polygon

Can any of the company-specific risk be diversified away by investing in both IShares Core and 21Shares Polygon 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 Core and 21Shares Polygon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Core MSCI and 21Shares Polygon ETP, you can compare the effects of market volatilities on IShares Core and 21Shares Polygon 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 Core with a short position of 21Shares Polygon. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and 21Shares Polygon.

Diversification Opportunities for IShares Core and 21Shares Polygon

-0.45

Correlation Coefficient

IShares Core  21Shares Polygon

Very good diversification

The 3 months correlation between IShares and 21Shares is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and 21Shares Polygon ETP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21Shares Polygon ETP and IShares Core 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 Core MSCI are associated (or correlated) with 21Shares Polygon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Shares Polygon ETP has no effect on the direction of IShares Core i.e., IShares Core and 21Shares Polygon go up and down completely randomly.

Pair Corralation between IShares Core and 21Shares Polygon

Assuming the 90 days trading horizon IShares Core is expected to generate 34.88 times less return on investment than 21Shares Polygon. But when comparing it to its historical volatility, iShares Core MSCI is 8.03 times less risky than 21Shares Polygon. It trades about 0.03 of its potential returns per unit of risk. 21Shares Polygon ETP is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  443.00  in 21Shares Polygon ETP on September 16, 2024 and sell it today you would earn a total of  256.00  from holding 21Shares Polygon ETP or generate 57.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.97%
Values	Daily Returns

iShares Core MSCI  vs.  21Shares Polygon ETP

iShares Core MSCI

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core MSCI are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Core is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

21Shares Polygon ETP

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Polygon ETP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, 21Shares Polygon showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Core and 21Shares Polygon

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

The idea behind iShares Core MSCI and 21Shares Polygon 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.