Correlation Between Leverage Shares and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and IShares MSCI 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 MSCI 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 iShares MSCI Japan, you can compare the effects of market volatilities on Leverage Shares and IShares MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and IShares MSCI.
Diversification Opportunities for Leverage Shares and IShares MSCI
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leverage and IShares is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and iShares MSCI Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Japan 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Japan has no effect on the direction of Leverage Shares i.e., Leverage Shares and IShares MSCI go up and down completely randomly.
Pair Corralation between Leverage Shares and IShares MSCI
Assuming the 90 days trading horizon Leverage Shares 2x is expected to under-perform the IShares MSCI. In addition to that, Leverage Shares is 3.74 times more volatile than iShares MSCI Japan. It trades about -0.09 of its total potential returns per unit of risk. iShares MSCI Japan is currently generating about -0.1 per unit of volatility. If you would invest 507.00 in iShares MSCI Japan on January 23, 2025 and sell it today you would lose (22.00) from holding iShares MSCI Japan or give up 4.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 2x vs. iShares MSCI Japan
Performance |
| Timeline |
| Leverage Shares 2x |
| iShares MSCI Japan |
Leverage Shares and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and IShares MSCI
The main advantage of trading using opposite Leverage Shares and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's 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 |
| IShares MSCI vs. WisdomTree NASDAQ 100 | IShares MSCI vs. Lyxor 10Y Inflation | IShares MSCI vs. SSgA SPDR ETFs | IShares MSCI vs. Invesco Technology SP |
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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