Correlation Between LS 1x and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both LS 1x and Leverage Shares 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 LS 1x and Leverage Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LS 1x Amazon and Leverage Shares 2x, you can compare the effects of market volatilities on LS 1x and Leverage Shares 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 LS 1x with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS 1x and Leverage Shares.
Diversification Opportunities for LS 1x and Leverage Shares
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between 1AMZ and Leverage is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding LS 1x Amazon and Leverage Shares 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 2x and LS 1x 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 LS 1x Amazon are associated (or correlated) with Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 2x has no effect on the direction of LS 1x i.e., LS 1x and Leverage Shares go up and down completely randomly.
Pair Corralation between LS 1x and Leverage Shares
Assuming the 90 days trading horizon LS 1x Amazon is expected to generate 0.96 times more return on investment than Leverage Shares. However, LS 1x Amazon is 1.04 times less risky than Leverage Shares. It trades about 0.14 of its potential returns per unit of risk. Leverage Shares 2x is currently generating about -0.08 per unit of risk. If you would invest 571.00 in LS 1x Amazon on August 25, 2024 and sell it today you would earn a total of 34.00 from holding LS 1x Amazon or generate 5.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LS 1x Amazon vs. Leverage Shares 2x
Performance |
| Timeline |
| LS 1x Amazon |
| Leverage Shares 2x |
LS 1x and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS 1x and Leverage Shares
The main advantage of trading using opposite LS 1x and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS 1x position performs unexpectedly, Leverage Shares 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 Leverage Shares will offset losses from the drop in Leverage Shares' long position.| LS 1x vs. iShares MSCI Japan | LS 1x vs. Amundi EUR High | LS 1x vs. iShares JP Morgan | LS 1x vs. Xtrackers MSCI |
| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. WisdomTree SP 500 | Leverage Shares vs. WisdomTree Silver 3x | Leverage Shares vs. Leverage Shares 3x |
Check out your portfolio center.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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