Correlation Between Leverage Shares and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and Xtrackers 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 Xtrackers 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 Xtrackers MSCI World, you can compare the effects of market volatilities on Leverage Shares and Xtrackers 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 Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Xtrackers MSCI.
Diversification Opportunities for Leverage Shares and Xtrackers MSCI
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leverage and Xtrackers is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and Xtrackers MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI World 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI World has no effect on the direction of Leverage Shares i.e., Leverage Shares and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between Leverage Shares and Xtrackers MSCI
Assuming the 90 days trading horizon Leverage Shares is expected to generate 1.46 times less return on investment than Xtrackers MSCI. In addition to that, Leverage Shares is 1.98 times more volatile than Xtrackers MSCI World. It trades about 0.03 of its total potential returns per unit of risk. Xtrackers MSCI World is currently generating about 0.08 per unit of volatility. If you would invest 9,072 in Xtrackers MSCI World on August 31, 2024 and sell it today you would earn a total of 320.00 from holding Xtrackers MSCI World or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.78% |
| Values | Daily Returns |
Leverage Shares 2x vs. Xtrackers MSCI World
Performance |
| Timeline |
| Leverage Shares 2x |
| Xtrackers MSCI World |
Leverage Shares and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and Xtrackers MSCI
The main advantage of trading using opposite Leverage Shares and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, Xtrackers 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI's long position.| Leverage Shares vs. GraniteShares 3x Short | Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. WisdomTree Natural Gas |
| Xtrackers MSCI vs. Vanguard FTSE Developed | Xtrackers MSCI vs. Leverage Shares 2x | Xtrackers MSCI vs. Amundi Index Solutions | Xtrackers MSCI 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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