Correlation Between Leverage Shares and IShares Nasdaq
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and IShares Nasdaq 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 IShares Nasdaq 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 iShares Nasdaq Biotechnology, you can compare the effects of market volatilities on Leverage Shares and IShares Nasdaq 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 IShares Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and IShares Nasdaq.
Diversification Opportunities for Leverage Shares and IShares Nasdaq
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Leverage and IShares is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and iShares Nasdaq Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Nasdaq Biote 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 IShares Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Nasdaq Biote has no effect on the direction of Leverage Shares i.e., Leverage Shares and IShares Nasdaq go up and down completely randomly.
Pair Corralation between Leverage Shares and IShares Nasdaq
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 10.52 times more return on investment than IShares Nasdaq. However, Leverage Shares is 10.52 times more volatile than iShares Nasdaq Biotechnology. It trades about 0.32 of its potential returns per unit of risk. iShares Nasdaq Biotechnology is currently generating about -0.04 per unit of risk. If you would invest 1,393,560 in Leverage Shares 3x on August 30, 2024 and sell it today you would earn a total of 2,189,705 from holding Leverage Shares 3x or generate 157.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Leverage Shares 3x vs. iShares Nasdaq Biotechnology
Performance |
| Timeline |
| Leverage Shares 3x |
| iShares Nasdaq Biote |
Leverage Shares and IShares Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and IShares Nasdaq
The main advantage of trading using opposite Leverage Shares and IShares Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, IShares Nasdaq 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 IShares Nasdaq will offset losses from the drop in IShares Nasdaq'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 |
| IShares Nasdaq vs. iShares MSCI Japan | IShares Nasdaq vs. iShares JP Morgan | IShares Nasdaq vs. iShares MSCI Europe | IShares Nasdaq vs. iShares Global Corp |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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