Correlation Between Leverage Shares and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and SPDR Dow 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 Leverage Shares and SPDR Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leverage Shares 2x and SPDR Dow Jones, you can compare the effects of market volatilities on Leverage Shares and SPDR Dow 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 Leverage Shares with a short position of SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and SPDR Dow.
Diversification Opportunities for Leverage Shares and SPDR Dow
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leverage and SPDR is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones and Leverage Shares 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 Leverage Shares 2x are associated (or correlated) with SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of Leverage Shares i.e., Leverage Shares and SPDR Dow go up and down completely randomly.
Pair Corralation between Leverage Shares and SPDR Dow
Assuming the 90 days trading horizon Leverage Shares 2x is expected to generate 63.97 times more return on investment than SPDR Dow. However, Leverage Shares is 63.97 times more volatile than SPDR Dow Jones. It trades about 0.05 of its potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.13 per unit of risk. If you would invest 17,888 in Leverage Shares 2x on September 12, 2024 and sell it today you would lose (14,801) from holding Leverage Shares 2x or give up 82.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 2x vs. SPDR Dow Jones
Performance |
| Timeline |
| Leverage Shares 2x |
| SPDR Dow Jones |
Leverage Shares and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and SPDR Dow
The main advantage of trading using opposite Leverage Shares and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, SPDR Dow 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 SPDR Dow will offset losses from the drop in SPDR Dow's long position.| Leverage Shares vs. SPDR Dow Jones | Leverage Shares vs. iShares Core MSCI | Leverage Shares vs. iShares SP 500 | Leverage Shares vs. Vanguard FTSE All World |
| SPDR Dow vs. iShares Core MSCI | SPDR Dow vs. iShares SP 500 | SPDR Dow vs. Vanguard FTSE All World | SPDR Dow vs. iShares Core MSCI |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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