Correlation Between Leverage Shares and Xtrackers USD
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and Xtrackers USD 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 USD 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 USD Corporate, you can compare the effects of market volatilities on Leverage Shares and Xtrackers USD 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 USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Xtrackers USD.
Diversification Opportunities for Leverage Shares and Xtrackers USD
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leverage and Xtrackers is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and Xtrackers USD Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers USD Corporate 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 USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers USD Corporate has no effect on the direction of Leverage Shares i.e., Leverage Shares and Xtrackers USD go up and down completely randomly.
Pair Corralation between Leverage Shares and Xtrackers USD
Assuming the 90 days trading horizon Leverage Shares 2x is expected to generate 10.75 times more return on investment than Xtrackers USD. However, Leverage Shares is 10.75 times more volatile than Xtrackers USD Corporate. It trades about 0.08 of its potential returns per unit of risk. Xtrackers USD Corporate is currently generating about 0.07 per unit of risk. If you would invest 4,497 in Leverage Shares 2x on September 13, 2024 and sell it today you would earn a total of 1,194 from holding Leverage Shares 2x or generate 26.55% 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. Xtrackers USD Corporate
Performance |
| Timeline |
| Leverage Shares 2x |
| Xtrackers USD Corporate |
Leverage Shares and Xtrackers USD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and Xtrackers USD
The main advantage of trading using opposite Leverage Shares and Xtrackers USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, Xtrackers USD 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 USD will offset losses from the drop in Xtrackers USD's long position.| Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. GraniteShares 3x Short | Leverage Shares vs. WisdomTree Natural Gas |
| Xtrackers USD vs. Vanguard FTSE Developed | Xtrackers USD vs. Leverage Shares 2x | Xtrackers USD vs. Amundi Index Solutions | Xtrackers USD 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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