Correlation Between Leverage Shares and Franklin LibertyQ
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and Franklin LibertyQ 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 Franklin LibertyQ 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 Franklin LibertyQ AC, you can compare the effects of market volatilities on Leverage Shares and Franklin LibertyQ 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 Franklin LibertyQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Franklin LibertyQ.
Diversification Opportunities for Leverage Shares and Franklin LibertyQ
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leverage and Franklin is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and Franklin LibertyQ AC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin LibertyQ 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 Franklin LibertyQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin LibertyQ has no effect on the direction of Leverage Shares i.e., Leverage Shares and Franklin LibertyQ go up and down completely randomly.
Pair Corralation between Leverage Shares and Franklin LibertyQ
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 25.4 times more return on investment than Franklin LibertyQ. However, Leverage Shares is 25.4 times more volatile than Franklin LibertyQ AC. It trades about 0.42 of its potential returns per unit of risk. Franklin LibertyQ AC is currently generating about -0.05 per unit of risk. If you would invest 1,114,340 in Leverage Shares 3x on September 3, 2024 and sell it today you would earn a total of 2,637,735 from holding Leverage Shares 3x or generate 236.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 3x vs. Franklin LibertyQ AC
Performance |
| Timeline |
| Leverage Shares 3x |
| Franklin LibertyQ |
Leverage Shares and Franklin LibertyQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and Franklin LibertyQ
The main advantage of trading using opposite Leverage Shares and Franklin LibertyQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, Franklin LibertyQ 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 Franklin LibertyQ will offset losses from the drop in Franklin LibertyQ'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 |
| Franklin LibertyQ vs. Franklin LibertyQ Global | Franklin LibertyQ vs. Franklin Libertyshares ICAV | Franklin LibertyQ vs. Franklin FTSE Asia | Franklin LibertyQ vs. Franklin FTSE Brazil |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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