Correlation Between Leverage Shares and LS 1x
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and LS 1x 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 LS 1x 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 LS 1x Coinbase, you can compare the effects of market volatilities on Leverage Shares and LS 1x 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 LS 1x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and LS 1x.
Diversification Opportunities for Leverage Shares and LS 1x
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Leverage and COI1 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and LS 1x Coinbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS 1x Coinbase 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 LS 1x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS 1x Coinbase has no effect on the direction of Leverage Shares i.e., Leverage Shares and LS 1x go up and down completely randomly.
Pair Corralation between Leverage Shares and LS 1x
Assuming the 90 days trading horizon Leverage Shares 2x is expected to under-perform the LS 1x. But the etf apears to be less risky and, when comparing its historical volatility, Leverage Shares 2x is 1.12 times less risky than LS 1x. The etf trades about -0.43 of its potential returns per unit of risk. The LS 1x Coinbase is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 559.00 in LS 1x Coinbase on October 23, 2024 and sell it today you would earn a total of 50.00 from holding LS 1x Coinbase or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 2x vs. LS 1x Coinbase
Performance |
| Timeline |
| Leverage Shares 2x |
| LS 1x Coinbase |
Leverage Shares and LS 1x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and LS 1x
The main advantage of trading using opposite Leverage Shares and LS 1x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, LS 1x 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 LS 1x will offset losses from the drop in LS 1x's long position.The idea behind Leverage Shares 2x and LS 1x Coinbase pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| LS 1x vs. Vanguard FTSE Developed | LS 1x vs. Leverage Shares 2x | LS 1x vs. Amundi Index Solutions | LS 1x 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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