Correlation Between Leverage Shares and VanEck Morningstar
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and VanEck Morningstar 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 VanEck Morningstar 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 VanEck Morningstar SMID, you can compare the effects of market volatilities on Leverage Shares and VanEck Morningstar 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 VanEck Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and VanEck Morningstar.
Diversification Opportunities for Leverage Shares and VanEck Morningstar
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leverage and VanEck is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and VanEck Morningstar SMID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Morningstar SMID 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 VanEck Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Morningstar SMID has no effect on the direction of Leverage Shares i.e., Leverage Shares and VanEck Morningstar go up and down completely randomly.
Pair Corralation between Leverage Shares and VanEck Morningstar
Assuming the 90 days trading horizon Leverage Shares 2x is expected to generate 13.63 times more return on investment than VanEck Morningstar. However, Leverage Shares is 13.63 times more volatile than VanEck Morningstar SMID. It trades about 0.05 of its potential returns per unit of risk. VanEck Morningstar SMID is currently generating about 0.0 per unit of risk. If you would invest 3,349 in Leverage Shares 2x on September 4, 2024 and sell it today you would earn a total of 1,888 from holding Leverage Shares 2x or generate 56.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.82% |
| Values | Daily Returns |
Leverage Shares 2x vs. VanEck Morningstar SMID
Performance |
| Timeline |
| Leverage Shares 2x |
| VanEck Morningstar SMID |
Leverage Shares and VanEck Morningstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and VanEck Morningstar
The main advantage of trading using opposite Leverage Shares and VanEck Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, VanEck Morningstar 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 VanEck Morningstar will offset losses from the drop in VanEck Morningstar'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 |
| VanEck Morningstar vs. Vanguard FTSE Developed | VanEck Morningstar vs. Leverage Shares 2x | VanEck Morningstar vs. Amundi Index Solutions | VanEck Morningstar 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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