Correlation Between Leverage Shares and Invesco Markets
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and Invesco Markets 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 Invesco Markets 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 Invesco Markets II, you can compare the effects of market volatilities on Leverage Shares and Invesco Markets 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 Invesco Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Invesco Markets.
Diversification Opportunities for Leverage Shares and Invesco Markets
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Leverage and Invesco is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and Invesco Markets II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Markets II 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 Invesco Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Markets II has no effect on the direction of Leverage Shares i.e., Leverage Shares and Invesco Markets go up and down completely randomly.
Pair Corralation between Leverage Shares and Invesco Markets
Assuming the 90 days trading horizon Leverage Shares is expected to generate 1.05 times less return on investment than Invesco Markets. In addition to that, Leverage Shares is 2.75 times more volatile than Invesco Markets II. It trades about 0.02 of its total potential returns per unit of risk. Invesco Markets II is currently generating about 0.07 per unit of volatility. If you would invest 257,225 in Invesco Markets II on September 19, 2024 and sell it today you would earn a total of 237,900 from holding Invesco Markets II or generate 92.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Leverage Shares 3x vs. Invesco Markets II
Performance |
| Timeline |
| Leverage Shares 3x |
| Invesco Markets II |
Leverage Shares and Invesco Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and Invesco Markets
The main advantage of trading using opposite Leverage Shares and Invesco Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, Invesco Markets 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 Invesco Markets will offset losses from the drop in Invesco Markets' 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 |
| Invesco Markets vs. Invesco MSCI Emerging | Invesco Markets vs. Invesco EURO STOXX | Invesco Markets vs. Invesco Markets Plc | Invesco Markets vs. Invesco FTSE RAFI |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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