Correlation Between Leverage Shares and UBS ETF
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and UBS ETF 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 UBS ETF 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 UBS ETF plc, you can compare the effects of market volatilities on Leverage Shares and UBS ETF 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 UBS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and UBS ETF.
Diversification Opportunities for Leverage Shares and UBS ETF
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Leverage and UBS is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and UBS ETF plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF plc 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 UBS ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETF plc has no effect on the direction of Leverage Shares i.e., Leverage Shares and UBS ETF go up and down completely randomly.
Pair Corralation between Leverage Shares and UBS ETF
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 10.73 times more return on investment than UBS ETF. However, Leverage Shares is 10.73 times more volatile than UBS ETF plc. It trades about 0.24 of its potential returns per unit of risk. UBS ETF plc is currently generating about 0.25 per unit of risk. If you would invest 2,071 in Leverage Shares 3x on August 30, 2024 and sell it today you would earn a total of 1,123 from holding Leverage Shares 3x or generate 54.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 3x vs. UBS ETF plc
Performance |
| Timeline |
| Leverage Shares 3x |
| UBS ETF plc |
Leverage Shares and UBS ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and UBS ETF
The main advantage of trading using opposite Leverage Shares and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, UBS ETF 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 UBS ETF will offset losses from the drop in UBS ETF'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 |
| UBS ETF vs. Vanguard FTSE Developed | UBS ETF vs. Leverage Shares 2x | UBS ETF vs. Amundi Index Solutions | UBS ETF vs. Amundi Index Solutions |
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
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |