Correlation Between Vanguard USD and VanEck Polkadot

Can any of the company-specific risk be diversified away by investing in both Vanguard USD and VanEck 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 Vanguard USD and VanEck Polkadot into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard USD Treasury and VanEck Polkadot ETN, you can compare the effects of market volatilities on Vanguard USD and VanEck 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 Vanguard USD with a short position of VanEck Polkadot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard USD and VanEck Polkadot.

Diversification Opportunities for Vanguard USD and VanEck Polkadot

0.88

Correlation Coefficient

Vanguard USD  VanEck Polkadot

Very poor diversification

The 3 months correlation between Vanguard and VanEck is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard USD Treasury and VanEck Polkadot ETN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Polkadot ETN and Vanguard USD 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 Vanguard USD Treasury are associated (or correlated) with VanEck Polkadot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Polkadot ETN has no effect on the direction of Vanguard USD i.e., Vanguard USD and VanEck Polkadot go up and down completely randomly.

Pair Corralation between Vanguard USD and VanEck Polkadot

Assuming the 90 days trading horizon Vanguard USD Treasury is expected to under-perform the VanEck Polkadot. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard USD Treasury is 46.71 times less risky than VanEck Polkadot. The etf trades about -0.04 of its potential returns per unit of risk. The VanEck Polkadot ETN is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  182.00  in VanEck Polkadot ETN on September 23, 2024 and sell it today you would earn a total of  33.00  from holding VanEck Polkadot ETN or generate 18.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Vanguard USD Treasury  vs.  VanEck Polkadot ETN

Vanguard USD Treasury

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard USD Treasury are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vanguard USD is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

VanEck Polkadot ETN

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Polkadot ETN are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck Polkadot unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vanguard USD and VanEck Polkadot

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

The idea behind Vanguard USD Treasury and VanEck Polkadot ETN 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.