Correlation Between Leverage Shares and Franklin FTSE
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and Franklin FTSE 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 Franklin FTSE 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 Franklin FTSE Brazil, you can compare the effects of market volatilities on Leverage Shares and Franklin FTSE 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 Franklin FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Franklin FTSE.
Diversification Opportunities for Leverage Shares and Franklin FTSE
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leverage and Franklin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and Franklin FTSE Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin FTSE Brazil 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 Franklin FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin FTSE Brazil has no effect on the direction of Leverage Shares i.e., Leverage Shares and Franklin FTSE go up and down completely randomly.
Pair Corralation between Leverage Shares and Franklin FTSE
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 5.93 times more return on investment than Franklin FTSE. However, Leverage Shares is 5.93 times more volatile than Franklin FTSE Brazil. It trades about 0.13 of its potential returns per unit of risk. Franklin FTSE Brazil is currently generating about -0.15 per unit of risk. If you would invest 43,759 in Leverage Shares 3x on September 15, 2024 and sell it today you would earn a total of 8,014 from holding Leverage Shares 3x or generate 18.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 3x vs. Franklin FTSE Brazil
Performance |
| Timeline |
| Leverage Shares 3x |
| Franklin FTSE Brazil |
Leverage Shares and Franklin FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and Franklin FTSE
The main advantage of trading using opposite Leverage Shares and Franklin FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, Franklin FTSE 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 Franklin FTSE will offset losses from the drop in Franklin FTSE's long position.| Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. WisdomTree SP 500 |
| Franklin FTSE vs. Leverage Shares 3x | Franklin FTSE vs. Leverage Shares 3x | Franklin FTSE vs. Leverage Shares 3x | Franklin FTSE vs. SP 500 VIX |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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