Correlation Between Leverage Shares and SSgA SPDR
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and SSgA SPDR 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 SSgA SPDR 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 SSgA SPDR ETFs, you can compare the effects of market volatilities on Leverage Shares and SSgA SPDR 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 SSgA SPDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and SSgA SPDR.
Diversification Opportunities for Leverage Shares and SSgA SPDR
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Leverage and SSgA is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and SSgA SPDR ETFs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSgA SPDR ETFs 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 SSgA SPDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSgA SPDR ETFs has no effect on the direction of Leverage Shares i.e., Leverage Shares and SSgA SPDR go up and down completely randomly.
Pair Corralation between Leverage Shares and SSgA SPDR
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 47.13 times more return on investment than SSgA SPDR. However, Leverage Shares is 47.13 times more volatile than SSgA SPDR ETFs. It trades about 0.21 of its potential returns per unit of risk. SSgA SPDR ETFs is currently generating about 0.25 per unit of risk. If you would invest 147,700 in Leverage Shares 3x on August 31, 2024 and sell it today you would earn a total of 114,595 from holding Leverage Shares 3x or generate 77.59% 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. SSgA SPDR ETFs
Performance |
| Timeline |
| Leverage Shares 3x |
| SSgA SPDR ETFs |
Leverage Shares and SSgA SPDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and SSgA SPDR
The main advantage of trading using opposite Leverage Shares and SSgA SPDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, SSgA SPDR 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 SSgA SPDR will offset losses from the drop in SSgA SPDR'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 |
| SSgA SPDR vs. GraniteShares 3x Short | SSgA SPDR vs. WisdomTree Natural Gas | SSgA SPDR vs. Leverage Shares 3x | SSgA SPDR vs. WisdomTree Natural Gas |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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