Correlation Between Leverage Shares and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and IShares MSCI 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 IShares MSCI 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 iShares MSCI North, you can compare the effects of market volatilities on Leverage Shares and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and IShares MSCI.
Diversification Opportunities for Leverage Shares and IShares MSCI
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Leverage and IShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and iShares MSCI North in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI North 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI North has no effect on the direction of Leverage Shares i.e., Leverage Shares and IShares MSCI go up and down completely randomly.
Pair Corralation between Leverage Shares and IShares MSCI
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 9.74 times more return on investment than IShares MSCI. However, Leverage Shares is 9.74 times more volatile than iShares MSCI North. It trades about 0.04 of its potential returns per unit of risk. iShares MSCI North is currently generating about 0.13 per unit of risk. If you would invest 3,108 in Leverage Shares 3x on September 2, 2024 and sell it today you would earn a total of 327.00 from holding Leverage Shares 3x or generate 10.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
Leverage Shares 3x vs. iShares MSCI North
Performance |
| Timeline |
| Leverage Shares 3x |
| iShares MSCI North |
Leverage Shares and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and IShares MSCI
The main advantage of trading using opposite Leverage Shares and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
| IShares MSCI vs. iShares MSCI Japan | IShares MSCI vs. iShares JP Morgan | IShares MSCI vs. iShares MSCI Europe | IShares MSCI vs. iShares Nasdaq Biotechnology |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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