Correlation Between VTC and DIA

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

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

Diversification Opportunities for VTC and DIA

0.05

Correlation Coefficient

VTC  DIA

Significant diversification

The 3 months correlation between VTC and DIA is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding VTC and DIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIA and VTC 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 VTC are associated (or correlated) with DIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIA has no effect on the direction of VTC i.e., VTC and DIA go up and down completely randomly.

Pair Corralation between VTC and DIA

Assuming the 90 days trading horizon VTC is expected to under-perform the DIA. But the crypto coin apears to be less risky and, when comparing its historical volatility, VTC is 3.57 times less risky than DIA. The crypto coin trades about -0.04 of its potential returns per unit of risk. The DIA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  51.00  in DIA on May 13, 2025 and sell it today you would earn a total of  39.00  from holding DIA or generate 76.47% return on investment over 90 days.

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

VTC  vs.  DIA

VTC

Risk-Adjusted Performance

Weakest

Over the last 90 days VTC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for VTC shareholders.

DIA

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in DIA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, DIA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VTC and DIA

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

The idea behind VTC and DIA 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 Transaction History module to view history of all your transactions and understand their impact on performance.