Correlation Between Leverage Shares and UBSFund Solutions

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Can any of the company-specific risk be diversified away by investing in both Leverage Shares and UBSFund Solutions 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 UBSFund Solutions 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 UBSFund Solutions JP, you can compare the effects of market volatilities on Leverage Shares and UBSFund Solutions 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 UBSFund Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and UBSFund Solutions.

Diversification Opportunities for Leverage Shares and UBSFund Solutions

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Leverage and UBSFund is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and UBSFund Solutions JP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBSFund Solutions 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 UBSFund Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBSFund Solutions has no effect on the direction of Leverage Shares i.e., Leverage Shares and UBSFund Solutions go up and down completely randomly.

Pair Corralation between Leverage Shares and UBSFund Solutions

Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 65.76 times more return on investment than UBSFund Solutions. However, Leverage Shares is 65.76 times more volatile than UBSFund Solutions JP. It trades about 0.17 of its potential returns per unit of risk. UBSFund Solutions JP is currently generating about 0.29 per unit of risk. If you would invest  3,181,140  in Leverage Shares 3x on September 12, 2024 and sell it today you would earn a total of  1,143,170  from holding Leverage Shares 3x or generate 35.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Leverage Shares 3x  vs.  UBSFund Solutions JP

 Performance 
       Timeline  
Leverage Shares 3x 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Leverage Shares 3x are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Leverage Shares unveiled solid returns over the last few months and may actually be approaching a breakup point.
UBSFund Solutions 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days UBSFund Solutions JP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, UBSFund Solutions is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Leverage Shares and UBSFund Solutions Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Leverage Shares and UBSFund Solutions

The main advantage of trading using opposite Leverage Shares and UBSFund Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, UBSFund Solutions 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 UBSFund Solutions will offset losses from the drop in UBSFund Solutions' long position.
The idea behind Leverage Shares 3x and UBSFund Solutions JP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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