Correlation Between Leverage Shares and IShares JP
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and IShares JP 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 JP 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 JP Morgan, you can compare the effects of market volatilities on Leverage Shares and IShares JP 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 JP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and IShares JP.
Diversification Opportunities for Leverage Shares and IShares JP
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Leverage and IShares is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and iShares JP Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares JP Morgan 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 JP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares JP Morgan has no effect on the direction of Leverage Shares i.e., Leverage Shares and IShares JP go up and down completely randomly.
Pair Corralation between Leverage Shares and IShares JP
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 12.41 times more return on investment than IShares JP. However, Leverage Shares is 12.41 times more volatile than iShares JP Morgan. It trades about 0.15 of its potential returns per unit of risk. iShares JP Morgan is currently generating about 0.23 per unit of risk. If you would invest 3,525 in Leverage Shares 3x on August 27, 2024 and sell it today you would earn a total of 609.00 from holding Leverage Shares 3x or generate 17.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 3x vs. iShares JP Morgan
Performance |
| Timeline |
| Leverage Shares 3x |
| iShares JP Morgan |
Leverage Shares and IShares JP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and IShares JP
The main advantage of trading using opposite Leverage Shares and IShares JP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, IShares JP 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 JP will offset losses from the drop in IShares JP's long position.| Leverage Shares vs. WisdomTree SP 500 | Leverage Shares vs. WisdomTree Silver 3x | Leverage Shares vs. Lyxor 10Y Inflation | Leverage Shares vs. GraniteShares 3x Long |
| IShares JP vs. Leverage Shares 2x | IShares JP vs. WisdomTree Silver 3x | IShares JP vs. Leverage Shares 2x | IShares JP vs. WisdomTree SP 500 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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