Correlation Between Leverage Shares and IShares Corp
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and IShares Corp 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 Corp 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 Corp Bond, you can compare the effects of market volatilities on Leverage Shares and IShares Corp 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 Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and IShares Corp.
Diversification Opportunities for Leverage Shares and IShares Corp
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Leverage and IShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and iShares Corp Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Corp Bond 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 Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Corp Bond has no effect on the direction of Leverage Shares i.e., Leverage Shares and IShares Corp go up and down completely randomly.
Pair Corralation between Leverage Shares and IShares Corp
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 59.87 times more return on investment than IShares Corp. However, Leverage Shares is 59.87 times more volatile than iShares Corp Bond. It trades about 0.39 of its potential returns per unit of risk. iShares Corp Bond is currently generating about 0.14 per unit of risk. If you would invest 1,159,060 in Leverage Shares 3x on September 2, 2024 and sell it today you would earn a total of 2,593,015 from holding Leverage Shares 3x or generate 223.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 3x vs. iShares Corp Bond
Performance |
| Timeline |
| Leverage Shares 3x |
| iShares Corp Bond |
Leverage Shares and IShares Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and IShares Corp
The main advantage of trading using opposite Leverage Shares and IShares Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, IShares Corp 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 Corp will offset losses from the drop in IShares Corp's long position.| Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. WisdomTree SP 500 | Leverage Shares vs. GraniteShares 3x Short |
| IShares Corp vs. iShares MSCI Japan | IShares Corp vs. iShares JP Morgan | IShares Corp vs. iShares MSCI Europe | IShares Corp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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