Correlation Between Leverage Shares and Edinburgh Worldwide
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and Edinburgh Worldwide 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 Edinburgh Worldwide 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 Edinburgh Worldwide Investment, you can compare the effects of market volatilities on Leverage Shares and Edinburgh Worldwide 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 Edinburgh Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Edinburgh Worldwide.
Diversification Opportunities for Leverage Shares and Edinburgh Worldwide
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leverage and Edinburgh is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and Edinburgh Worldwide Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edinburgh Worldwide 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 Edinburgh Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edinburgh Worldwide has no effect on the direction of Leverage Shares i.e., Leverage Shares and Edinburgh Worldwide go up and down completely randomly.
Pair Corralation between Leverage Shares and Edinburgh Worldwide
Assuming the 90 days trading horizon Leverage Shares 2x is expected to generate 11.02 times more return on investment than Edinburgh Worldwide. However, Leverage Shares is 11.02 times more volatile than Edinburgh Worldwide Investment. It trades about 0.05 of its potential returns per unit of risk. Edinburgh Worldwide Investment is currently generating about 0.02 per unit of risk. If you would invest 2,272 in Leverage Shares 2x on October 13, 2024 and sell it today you would earn a total of 2,631 from holding Leverage Shares 2x or generate 115.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Leverage Shares 2x vs. Edinburgh Worldwide Investment
Performance |
| Timeline |
| Leverage Shares 2x |
| Edinburgh Worldwide |
Leverage Shares and Edinburgh Worldwide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and Edinburgh Worldwide
The main advantage of trading using opposite Leverage Shares and Edinburgh Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, Edinburgh Worldwide 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 Edinburgh Worldwide will offset losses from the drop in Edinburgh Worldwide'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 |
| Edinburgh Worldwide vs. BlackRock Latin American | Edinburgh Worldwide vs. VinaCapital Vietnam Opportunity | Edinburgh Worldwide vs. iShares MSCI Japan | Edinburgh Worldwide vs. Amundi EUR High |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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