Correlation Between Leverage Shares and Invesco Health
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and Invesco Health 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 Invesco Health 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 Invesco Health Care, you can compare the effects of market volatilities on Leverage Shares and Invesco Health 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 Invesco Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Invesco Health.
Diversification Opportunities for Leverage Shares and Invesco Health
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Leverage and Invesco is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and Invesco Health Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Health Care 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 Invesco Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Health Care has no effect on the direction of Leverage Shares i.e., Leverage Shares and Invesco Health go up and down completely randomly.
Pair Corralation between Leverage Shares and Invesco Health
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 26.7 times more return on investment than Invesco Health. However, Leverage Shares is 26.7 times more volatile than Invesco Health Care. It trades about 0.18 of its potential returns per unit of risk. Invesco Health Care is currently generating about -0.03 per unit of risk. If you would invest 155,060 in Leverage Shares 3x on August 30, 2024 and sell it today you would earn a total of 85,580 from holding Leverage Shares 3x or generate 55.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 3x vs. Invesco Health Care
Performance |
| Timeline |
| Leverage Shares 3x |
| Invesco Health Care |
Leverage Shares and Invesco Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and Invesco Health
The main advantage of trading using opposite Leverage Shares and Invesco Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, Invesco Health 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 Invesco Health will offset losses from the drop in Invesco Health'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 |
| Invesco Health vs. Invesco MSCI Emerging | Invesco Health vs. Invesco EURO STOXX | Invesco Health vs. Invesco Markets Plc | Invesco Health vs. Invesco FTSE RAFI |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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