Correlation Between Leverage Shares and IShares Dow
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and IShares Dow 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 Dow 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 Dow Jones, you can compare the effects of market volatilities on Leverage Shares and IShares Dow 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 Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and IShares Dow.
Diversification Opportunities for Leverage Shares and IShares Dow
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Leverage and IShares is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and iShares Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Dow Jones 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 Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Dow Jones has no effect on the direction of Leverage Shares i.e., Leverage Shares and IShares Dow go up and down completely randomly.
Pair Corralation between Leverage Shares and IShares Dow
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 16.06 times more return on investment than IShares Dow. However, Leverage Shares is 16.06 times more volatile than iShares Dow Jones. It trades about 0.12 of its potential returns per unit of risk. iShares Dow Jones is currently generating about 0.09 per unit of risk. If you would invest 80,640 in Leverage Shares 3x on September 4, 2024 and sell it today you would earn a total of 3,744,995 from holding Leverage Shares 3x or generate 4644.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 3x vs. iShares Dow Jones
Performance |
| Timeline |
| Leverage Shares 3x |
| iShares Dow Jones |
Leverage Shares and IShares Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and IShares Dow
The main advantage of trading using opposite Leverage Shares and IShares Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, IShares Dow 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 Dow will offset losses from the drop in IShares Dow's long position.| Leverage Shares vs. Vanguard FTSE Developed | Leverage Shares vs. Leverage Shares 2x | Leverage Shares vs. Amundi Index Solutions | Leverage Shares vs. Amundi Index Solutions |
| IShares Dow vs. iShares MSCI Japan | IShares Dow vs. iShares JP Morgan | IShares Dow vs. iShares MSCI Europe | IShares Dow vs. iShares Nasdaq Biotechnology |
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.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |