Correlation Between Aeorema Communications and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both Aeorema Communications and Leverage Shares 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 Aeorema Communications and Leverage Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aeorema Communications Plc and Leverage Shares 2x, you can compare the effects of market volatilities on Aeorema Communications and Leverage Shares 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 Aeorema Communications with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aeorema Communications and Leverage Shares.
Diversification Opportunities for Aeorema Communications and Leverage Shares
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aeorema and Leverage is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aeorema Communications Plc and Leverage Shares 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 2x and Aeorema Communications 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 Aeorema Communications Plc are associated (or correlated) with Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 2x has no effect on the direction of Aeorema Communications i.e., Aeorema Communications and Leverage Shares go up and down completely randomly.
Pair Corralation between Aeorema Communications and Leverage Shares
Assuming the 90 days trading horizon Aeorema Communications Plc is expected to under-perform the Leverage Shares. But the stock apears to be less risky and, when comparing its historical volatility, Aeorema Communications Plc is 9.75 times less risky than Leverage Shares. The stock trades about -0.05 of its potential returns per unit of risk. The Leverage Shares 2x is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,739 in Leverage Shares 2x on August 27, 2024 and sell it today you would earn a total of 1,067 from holding Leverage Shares 2x or generate 28.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aeorema Communications Plc vs. Leverage Shares 2x
Performance |
| Timeline |
| Aeorema Communications |
| Leverage Shares 2x |
Aeorema Communications and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aeorema Communications and Leverage Shares
The main advantage of trading using opposite Aeorema Communications and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeorema Communications position performs unexpectedly, Leverage Shares 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 Leverage Shares will offset losses from the drop in Leverage Shares' long position.| Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Hyundai Motor | Aeorema Communications vs. Toyota Motor Corp |
| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. WisdomTree SP 500 | Leverage Shares vs. WisdomTree Silver 3x | Leverage Shares vs. Lyxor 10Y Inflation |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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