Correlation Between Leverage Shares and JPM AC
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and JPM AC 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 JPM AC 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 JPM AC Asia, you can compare the effects of market volatilities on Leverage Shares and JPM AC 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 JPM AC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and JPM AC.
Diversification Opportunities for Leverage Shares and JPM AC
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leverage and JPM is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and JPM AC Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM AC Asia 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 JPM AC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM AC Asia has no effect on the direction of Leverage Shares i.e., Leverage Shares and JPM AC go up and down completely randomly.
Pair Corralation between Leverage Shares and JPM AC
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 6.43 times more return on investment than JPM AC. However, Leverage Shares is 6.43 times more volatile than JPM AC Asia. It trades about 0.35 of its potential returns per unit of risk. JPM AC Asia is currently generating about -0.05 per unit of risk. If you would invest 2,739 in Leverage Shares 3x on September 2, 2024 and sell it today you would earn a total of 1,155 from holding Leverage Shares 3x or generate 42.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 3x vs. JPM AC Asia
Performance |
| Timeline |
| Leverage Shares 3x |
| JPM AC Asia |
Leverage Shares and JPM AC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and JPM AC
The main advantage of trading using opposite Leverage Shares and JPM AC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, JPM AC 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 JPM AC will offset losses from the drop in JPM AC's long position.| Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. WisdomTree SP 500 |
| JPM AC vs. Vanguard FTSE Developed | JPM AC vs. Leverage Shares 2x | JPM AC vs. Amundi Index Solutions | JPM AC vs. Amundi Index Solutions |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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