Correlation Between Leverage Shares and PIMCO Sterling
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and PIMCO Sterling 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 PIMCO Sterling 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 PIMCO Sterling Short, you can compare the effects of market volatilities on Leverage Shares and PIMCO Sterling 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 PIMCO Sterling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and PIMCO Sterling.
Diversification Opportunities for Leverage Shares and PIMCO Sterling
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Leverage and PIMCO is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and PIMCO Sterling Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Sterling Short 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 PIMCO Sterling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Sterling Short has no effect on the direction of Leverage Shares i.e., Leverage Shares and PIMCO Sterling go up and down completely randomly.
Pair Corralation between Leverage Shares and PIMCO Sterling
Assuming the 90 days trading horizon Leverage Shares 2x is expected to generate 121.26 times more return on investment than PIMCO Sterling. However, Leverage Shares is 121.26 times more volatile than PIMCO Sterling Short. It trades about 0.19 of its potential returns per unit of risk. PIMCO Sterling Short is currently generating about 0.69 per unit of risk. If you would invest 4,642 in Leverage Shares 2x on November 28, 2024 and sell it today you would earn a total of 709.00 from holding Leverage Shares 2x or generate 15.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 2x vs. PIMCO Sterling Short
Performance |
| Timeline |
| Leverage Shares 2x |
| PIMCO Sterling Short |
Leverage Shares and PIMCO Sterling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and PIMCO Sterling
The main advantage of trading using opposite Leverage Shares and PIMCO Sterling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, PIMCO Sterling 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 PIMCO Sterling will offset losses from the drop in PIMCO Sterling'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 |
| PIMCO Sterling vs. PIMCO Dollar Short | PIMCO Sterling vs. PIMCO Low Duration | PIMCO Sterling vs. PIMCO ETFs plc | PIMCO Sterling vs. PIMCO Short Term 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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