Correlation Between 21Shares Crypto and Lyxor UCITS

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

By analyzing existing cross correlation between 21Shares Crypto Basket and Lyxor UCITS Japan, you can compare the effects of market volatilities on 21Shares Crypto and Lyxor UCITS 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 Crypto with a short position of Lyxor UCITS. Check out your portfolio center. Please also check ongoing floating volatility patterns of 21Shares Crypto and Lyxor UCITS.

Diversification Opportunities for 21Shares Crypto and Lyxor UCITS

0.39

Correlation Coefficient

21Shares Crypto  Lyxor UCITS

Weak diversification

The 3 months correlation between 21Shares and Lyxor is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding 21Shares Crypto Basket and Lyxor UCITS Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor UCITS Japan and 21Shares Crypto 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 Crypto Basket are associated (or correlated) with Lyxor UCITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor UCITS Japan has no effect on the direction of 21Shares Crypto i.e., 21Shares Crypto and Lyxor UCITS go up and down completely randomly.

Pair Corralation between 21Shares Crypto and Lyxor UCITS

Assuming the 90 days trading horizon 21Shares Crypto Basket is expected to generate 3.36 times more return on investment than Lyxor UCITS. However, 21Shares Crypto is 3.36 times more volatile than Lyxor UCITS Japan. It trades about 0.28 of its potential returns per unit of risk. Lyxor UCITS Japan is currently generating about 0.01 per unit of risk. If you would invest  1,550  in 21Shares Crypto Basket on September 1, 2024 and sell it today you would earn a total of  1,551  from holding 21Shares Crypto Basket or generate 100.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

21Shares Crypto Basket  vs.  Lyxor UCITS Japan

21Shares Crypto Basket

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 21Shares Crypto Basket are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, 21Shares Crypto reported solid returns over the last few months and may actually be approaching a breakup point.

Lyxor UCITS Japan

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with 21Shares Crypto and Lyxor UCITS

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

The idea behind 21Shares Crypto Basket and Lyxor UCITS Japan 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.