Correlation Between Leverage Shares and VanEck Crypto

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Can any of the company-specific risk be diversified away by investing in both Leverage Shares and VanEck Crypto 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 VanEck Crypto 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 VanEck Crypto Blockchain, you can compare the effects of market volatilities on Leverage Shares and VanEck Crypto 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 VanEck Crypto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and VanEck Crypto.

Diversification Opportunities for Leverage Shares and VanEck Crypto

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Leverage and VanEck is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and VanEck Crypto Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Crypto Blockchain 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 VanEck Crypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Crypto Blockchain has no effect on the direction of Leverage Shares i.e., Leverage Shares and VanEck Crypto go up and down completely randomly.

Pair Corralation between Leverage Shares and VanEck Crypto

Assuming the 90 days trading horizon Leverage Shares 3x is expected to under-perform the VanEck Crypto. In addition to that, Leverage Shares is 1.75 times more volatile than VanEck Crypto Blockchain. It trades about -0.14 of its total potential returns per unit of risk. VanEck Crypto Blockchain is currently generating about -0.24 per unit of volatility. If you would invest  1,038  in VanEck Crypto Blockchain on November 28, 2024 and sell it today you would lose (250.00) from holding VanEck Crypto Blockchain or give up 24.08% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Leverage Shares 3x  vs.  VanEck Crypto Blockchain

 Performance 
       Timeline  
Leverage Shares 3x 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Over the last 90 days Leverage Shares 3x has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.
VanEck Crypto Blockchain 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days VanEck Crypto Blockchain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Leverage Shares and VanEck Crypto Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Leverage Shares and VanEck Crypto

The main advantage of trading using opposite Leverage Shares and VanEck Crypto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, VanEck Crypto 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 VanEck Crypto will offset losses from the drop in VanEck Crypto's long position.
The idea behind Leverage Shares 3x and VanEck Crypto Blockchain 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.

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