Correlation Between Leverage Shares and SPDR MSCI
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and SPDR 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 SPDR 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 SPDR MSCI Europe, you can compare the effects of market volatilities on Leverage Shares and SPDR 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 SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and SPDR MSCI.
Diversification Opportunities for Leverage Shares and SPDR MSCI
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Leverage and SPDR is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and SPDR MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI Europe 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 SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI Europe has no effect on the direction of Leverage Shares i.e., Leverage Shares and SPDR MSCI go up and down completely randomly.
Pair Corralation between Leverage Shares and SPDR MSCI
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 21.9 times more return on investment than SPDR MSCI. However, Leverage Shares is 21.9 times more volatile than SPDR MSCI Europe. It trades about 0.05 of its potential returns per unit of risk. SPDR MSCI Europe is currently generating about -0.04 per unit of risk. If you would invest 391,945 in Leverage Shares 3x on September 1, 2024 and sell it today you would lose (129,650) from holding Leverage Shares 3x or give up 33.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 3x vs. SPDR MSCI Europe
Performance |
| Timeline |
| Leverage Shares 3x |
| SPDR MSCI Europe |
Leverage Shares and SPDR MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and SPDR MSCI
The main advantage of trading using opposite Leverage Shares and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, SPDR 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 SPDR MSCI will offset losses from the drop in SPDR 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 |
| SPDR MSCI vs. SPDR Dow Jones | SPDR MSCI vs. SPDR SP Dividend | SPDR MSCI vs. SPDR Barclays Euro | SPDR MSCI vs. SPDR SP Consumer |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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