Correlation Between Leverage Shares and Scottish Mortgage
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and Scottish Mortgage 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 Scottish Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leverage Shares 3x and Scottish Mortgage Investment, you can compare the effects of market volatilities on Leverage Shares and Scottish Mortgage 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 Scottish Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Scottish Mortgage.
Diversification Opportunities for Leverage Shares and Scottish Mortgage
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Leverage and Scottish is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage 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 3x are associated (or correlated) with Scottish Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scottish Mortgage has no effect on the direction of Leverage Shares i.e., Leverage Shares and Scottish Mortgage go up and down completely randomly.
Pair Corralation between Leverage Shares and Scottish Mortgage
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 4.1 times more return on investment than Scottish Mortgage. However, Leverage Shares is 4.1 times more volatile than Scottish Mortgage Investment. It trades about 0.08 of its potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.04 per unit of risk. If you would invest 18,810 in Leverage Shares 3x on September 4, 2024 and sell it today you would earn a total of 73,595 from holding Leverage Shares 3x or generate 391.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.4% |
| Values | Daily Returns |
Leverage Shares 3x vs. Scottish Mortgage Investment
Performance |
| Timeline |
| Leverage Shares 3x |
| Scottish Mortgage |
Leverage Shares and Scottish Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and Scottish Mortgage
The main advantage of trading using opposite Leverage Shares and Scottish Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, Scottish Mortgage 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 Scottish Mortgage will offset losses from the drop in Scottish Mortgage's long position.| Leverage Shares vs. Scottish Mortgage Investment | Leverage Shares vs. VinaCapital Vietnam Opportunity | Leverage Shares vs. Edinburgh Worldwide Investment | Leverage Shares vs. Baillie Gifford Growth |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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