Correlation Between Leverage Shares and JPM BetaBuilders
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and JPM BetaBuilders 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 BetaBuilders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leverage Shares 2x and JPM BetaBuilders Treasury, you can compare the effects of market volatilities on Leverage Shares and JPM BetaBuilders 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 BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and JPM BetaBuilders.
Diversification Opportunities for Leverage Shares and JPM BetaBuilders
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leverage and JPM is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and JPM BetaBuilders Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM BetaBuilders Treasury 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 2x are associated (or correlated) with JPM BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM BetaBuilders Treasury has no effect on the direction of Leverage Shares i.e., Leverage Shares and JPM BetaBuilders go up and down completely randomly.
Pair Corralation between Leverage Shares and JPM BetaBuilders
Assuming the 90 days trading horizon Leverage Shares 2x is expected to generate 55.84 times more return on investment than JPM BetaBuilders. However, Leverage Shares is 55.84 times more volatile than JPM BetaBuilders Treasury. It trades about 0.42 of its potential returns per unit of risk. JPM BetaBuilders Treasury is currently generating about 0.5 per unit of risk. If you would invest 4,496 in Leverage Shares 2x on September 4, 2024 and sell it today you would earn a total of 741.00 from holding Leverage Shares 2x or generate 16.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 2x vs. JPM BetaBuilders Treasury
Performance |
| Timeline |
| Leverage Shares 2x |
| JPM BetaBuilders Treasury |
Leverage Shares and JPM BetaBuilders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and JPM BetaBuilders
The main advantage of trading using opposite Leverage Shares and JPM BetaBuilders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, JPM BetaBuilders 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 BetaBuilders will offset losses from the drop in JPM BetaBuilders' 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 |
| JPM BetaBuilders vs. Vanguard FTSE Developed | JPM BetaBuilders vs. Leverage Shares 2x | JPM BetaBuilders vs. Amundi Index Solutions | JPM BetaBuilders 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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