Correlation Between Leverage Shares and KraneShares CSI
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and KraneShares CSI 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 KraneShares CSI 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 KraneShares CSI China, you can compare the effects of market volatilities on Leverage Shares and KraneShares CSI 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 KraneShares CSI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and KraneShares CSI.
Diversification Opportunities for Leverage Shares and KraneShares CSI
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leverage and KraneShares is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and KraneShares CSI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KraneShares CSI China 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 KraneShares CSI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KraneShares CSI China has no effect on the direction of Leverage Shares i.e., Leverage Shares and KraneShares CSI go up and down completely randomly.
Pair Corralation between Leverage Shares and KraneShares CSI
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 2.35 times more return on investment than KraneShares CSI. However, Leverage Shares is 2.35 times more volatile than KraneShares CSI China. It trades about 0.21 of its potential returns per unit of risk. KraneShares CSI China is currently generating about -0.12 per unit of risk. If you would invest 3,114 in Leverage Shares 3x on August 30, 2024 and sell it today you would earn a total of 778.00 from holding Leverage Shares 3x or generate 24.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 3x vs. KraneShares CSI China
Performance |
| Timeline |
| Leverage Shares 3x |
| KraneShares CSI China |
Leverage Shares and KraneShares CSI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and KraneShares CSI
The main advantage of trading using opposite Leverage Shares and KraneShares CSI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, KraneShares CSI 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 KraneShares CSI will offset losses from the drop in KraneShares CSI's long position.| Leverage Shares vs. GraniteShares 3x Short | Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. WisdomTree Natural Gas |
| KraneShares CSI vs. Leverage Shares 3x | KraneShares CSI vs. GraniteShares 3x Short | KraneShares CSI vs. WisdomTree Natural Gas | KraneShares CSI vs. Leverage Shares 3x |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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