Correlation Between Leverage Shares and Lyxor Smart
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and Lyxor Smart 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 Lyxor Smart 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 Lyxor Smart Overnight, you can compare the effects of market volatilities on Leverage Shares and Lyxor Smart 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 Lyxor Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Lyxor Smart.
Diversification Opportunities for Leverage Shares and Lyxor Smart
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leverage and Lyxor is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and Lyxor Smart Overnight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Smart Overnight 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 Lyxor Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Smart Overnight has no effect on the direction of Leverage Shares i.e., Leverage Shares and Lyxor Smart go up and down completely randomly.
Pair Corralation between Leverage Shares and Lyxor Smart
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 940.88 times more return on investment than Lyxor Smart. However, Leverage Shares is 940.88 times more volatile than Lyxor Smart Overnight. It trades about 0.26 of its potential returns per unit of risk. Lyxor Smart Overnight is currently generating about 0.69 per unit of risk. If you would invest 119,310 in Leverage Shares 3x on August 24, 2024 and sell it today you would earn a total of 147,140 from holding Leverage Shares 3x or generate 123.33% 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. Lyxor Smart Overnight
Performance |
| Timeline |
| Leverage Shares 3x |
| Lyxor Smart Overnight |
Leverage Shares and Lyxor Smart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and Lyxor Smart
The main advantage of trading using opposite Leverage Shares and Lyxor Smart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, Lyxor Smart 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 Lyxor Smart will offset losses from the drop in Lyxor Smart's long position.| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. WisdomTree SP 500 | Leverage Shares vs. WisdomTree Silver 3x | Leverage Shares vs. Lyxor 10Y Inflation |
| Lyxor Smart vs. Leverage Shares 3x | Lyxor Smart vs. Leverage Shares 3x | Lyxor Smart vs. Leverage Shares 3x | Lyxor Smart vs. WisdomTree Short GBP |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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