Correlation Between Leverage Shares and SPDR Barclays
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and SPDR Barclays 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 SPDR Barclays into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leverage Shares 5x and SPDR Barclays Euro, you can compare the effects of market volatilities on Leverage Shares and SPDR Barclays 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 SPDR Barclays. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and SPDR Barclays.
Diversification Opportunities for Leverage Shares and SPDR Barclays
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leverage and SPDR is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 5x and SPDR Barclays Euro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Euro 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 5x are associated (or correlated) with SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Euro has no effect on the direction of Leverage Shares i.e., Leverage Shares and SPDR Barclays go up and down completely randomly.
Pair Corralation between Leverage Shares and SPDR Barclays
Assuming the 90 days trading horizon Leverage Shares 5x is expected to generate 26.1 times more return on investment than SPDR Barclays. However, Leverage Shares is 26.1 times more volatile than SPDR Barclays Euro. It trades about 0.11 of its potential returns per unit of risk. SPDR Barclays Euro is currently generating about 0.11 per unit of risk. If you would invest 12,634 in Leverage Shares 5x on August 29, 2024 and sell it today you would earn a total of 1,295 from holding Leverage Shares 5x or generate 10.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 5x vs. SPDR Barclays Euro
Performance |
| Timeline |
| Leverage Shares 5x |
| SPDR Barclays Euro |
Leverage Shares and SPDR Barclays Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and SPDR Barclays
The main advantage of trading using opposite Leverage Shares and SPDR Barclays positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, SPDR Barclays 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 SPDR Barclays will offset losses from the drop in SPDR Barclays' 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 |
| SPDR Barclays vs. Leverage Shares 3x | SPDR Barclays vs. Leverage Shares 3x | SPDR Barclays vs. Leverage Shares 3x | SPDR Barclays vs. WisdomTree Short GBP |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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