Correlation Between Leverage Shares and LG Russell
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and LG Russell 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 LG Russell 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 LG Russell 2000, you can compare the effects of market volatilities on Leverage Shares and LG Russell 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 LG Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and LG Russell.
Diversification Opportunities for Leverage Shares and LG Russell
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leverage and RTWO is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and LG Russell 2000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Russell 2000 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 LG Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Russell 2000 has no effect on the direction of Leverage Shares i.e., Leverage Shares and LG Russell go up and down completely randomly.
Pair Corralation between Leverage Shares and LG Russell
Assuming the 90 days trading horizon Leverage Shares 2x is expected to generate 27.49 times more return on investment than LG Russell. However, Leverage Shares is 27.49 times more volatile than LG Russell 2000. It trades about 0.04 of its potential returns per unit of risk. LG Russell 2000 is currently generating about 0.04 per unit of risk. If you would invest 9,624 in Leverage Shares 2x on December 4, 2024 and sell it today you would lose (7,455) from holding Leverage Shares 2x or give up 77.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Leverage Shares 2x vs. LG Russell 2000
Performance |
| Timeline |
| Leverage Shares 2x |
| LG Russell 2000 |
Leverage Shares and LG Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and LG Russell
The main advantage of trading using opposite Leverage Shares and LG Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, LG Russell 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 LG Russell will offset losses from the drop in LG Russell's long position.| Leverage Shares vs. Vanguard SP 500 | Leverage Shares vs. SPDR Dow Jones | Leverage Shares vs. iShares Core MSCI | Leverage Shares vs. iShares SP 500 |
| LG Russell vs. iShares MSCI EM | LG Russell vs. VanEck Multi Asset Growth | LG Russell vs. iShares III Public | LG Russell 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |