Correlation Between Leverage Shares and Lyxor Treasury
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and Lyxor Treasury 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 Lyxor Treasury 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 Lyxor Treasury 10Y, you can compare the effects of market volatilities on Leverage Shares and Lyxor Treasury 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 Lyxor Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Lyxor Treasury.
Diversification Opportunities for Leverage Shares and Lyxor Treasury
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Leverage and Lyxor is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and Lyxor Treasury 10Y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Treasury 10Y 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 Lyxor Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Treasury 10Y has no effect on the direction of Leverage Shares i.e., Leverage Shares and Lyxor Treasury go up and down completely randomly.
Pair Corralation between Leverage Shares and Lyxor Treasury
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 15.61 times more return on investment than Lyxor Treasury. However, Leverage Shares is 15.61 times more volatile than Lyxor Treasury 10Y. It trades about 0.3 of its potential returns per unit of risk. Lyxor Treasury 10Y is currently generating about 0.0 per unit of risk. If you would invest 508,110 in Leverage Shares 3x on September 3, 2024 and sell it today you would earn a total of 3,243,965 from holding Leverage Shares 3x or generate 638.44% 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. Lyxor Treasury 10Y
Performance |
| Timeline |
| Leverage Shares 3x |
| Lyxor Treasury 10Y |
Leverage Shares and Lyxor Treasury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and Lyxor Treasury
The main advantage of trading using opposite Leverage Shares and Lyxor Treasury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, Lyxor Treasury 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 Lyxor Treasury will offset losses from the drop in Lyxor Treasury'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 |
| Lyxor Treasury vs. GraniteShares 3x Short | Lyxor Treasury vs. WisdomTree Natural Gas | Lyxor Treasury vs. Leverage Shares 3x | Lyxor Treasury 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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