Correlation Between Leverage Shares and Multi Units
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and Multi Units 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 Multi Units 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 Multi Units Luxembourg, you can compare the effects of market volatilities on Leverage Shares and Multi Units 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 Multi Units. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Multi Units.
Diversification Opportunities for Leverage Shares and Multi Units
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Leverage and Multi is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and Multi Units Luxembourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units Luxembourg 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 Multi Units. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units Luxembourg has no effect on the direction of Leverage Shares i.e., Leverage Shares and Multi Units go up and down completely randomly.
Pair Corralation between Leverage Shares and Multi Units
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 23.41 times more return on investment than Multi Units. However, Leverage Shares is 23.41 times more volatile than Multi Units Luxembourg. It trades about 0.22 of its potential returns per unit of risk. Multi Units Luxembourg is currently generating about 0.18 per unit of risk. If you would invest 2,836,880 in Leverage Shares 3x on September 13, 2024 and sell it today you would earn a total of 1,487,430 from holding Leverage Shares 3x or generate 52.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Leverage Shares 3x vs. Multi Units Luxembourg
Performance |
| Timeline |
| Leverage Shares 3x |
| Multi Units Luxembourg |
Leverage Shares and Multi Units Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and Multi Units
The main advantage of trading using opposite Leverage Shares and Multi Units positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, Multi Units 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 Multi Units will offset losses from the drop in Multi Units' long position.| Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. GraniteShares 3x Short | Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. WisdomTree SP 500 |
| Multi Units vs. GraniteShares 3x Short | Multi Units vs. WisdomTree Natural Gas | Multi Units vs. Leverage Shares 3x | Multi Units 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |