Correlation Between Leverage Shares and WisdomTree WTI
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and WisdomTree WTI 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 WisdomTree WTI 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 WisdomTree WTI Crude, you can compare the effects of market volatilities on Leverage Shares and WisdomTree WTI 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 WisdomTree WTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and WisdomTree WTI.
Diversification Opportunities for Leverage Shares and WisdomTree WTI
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leverage and WisdomTree is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and WisdomTree WTI Crude in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree WTI Crude 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 WisdomTree WTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree WTI Crude has no effect on the direction of Leverage Shares i.e., Leverage Shares and WisdomTree WTI go up and down completely randomly.
Pair Corralation between Leverage Shares and WisdomTree WTI
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 7.23 times more return on investment than WisdomTree WTI. However, Leverage Shares is 7.23 times more volatile than WisdomTree WTI Crude. It trades about 0.33 of its potential returns per unit of risk. WisdomTree WTI Crude is currently generating about 0.02 per unit of risk. If you would invest 1,371,400 in Leverage Shares 3x on August 31, 2024 and sell it today you would earn a total of 2,281,780 from holding Leverage Shares 3x or generate 166.38% 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. WisdomTree WTI Crude
Performance |
| Timeline |
| Leverage Shares 3x |
| WisdomTree WTI Crude |
Leverage Shares and WisdomTree WTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and WisdomTree WTI
The main advantage of trading using opposite Leverage Shares and WisdomTree WTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, WisdomTree WTI 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 WisdomTree WTI will offset losses from the drop in WisdomTree WTI'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 |
| WisdomTree WTI vs. GraniteShares 3x Short | WisdomTree WTI vs. WisdomTree Natural Gas | WisdomTree WTI vs. Leverage Shares 3x | WisdomTree WTI 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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