Correlation Between Global X and Leverage Shares

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Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and Leverage Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Clean and Leverage Shares 2x, you can compare the effects of market volatilities on Global X 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 Global X with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Leverage Shares.

Diversification Opportunities for Global X and Leverage Shares

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Global and Leverage is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Global X Clean 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 Global X 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 Global X Clean 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 Global X i.e., Global X and Leverage Shares go up and down completely randomly.

Pair Corralation between Global X and Leverage Shares

Assuming the 90 days trading horizon Global X is expected to generate 279.7 times less return on investment than Leverage Shares. But when comparing it to its historical volatility, Global X Clean is 2.32 times less risky than Leverage Shares. It trades about 0.0 of its potential returns per unit of risk. Leverage Shares 2x is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  4,691  in Leverage Shares 2x on September 15, 2024 and sell it today you would earn a total of  827.00  from holding Leverage Shares 2x or generate 17.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Global X Clean  vs.  Leverage Shares 2x

 Performance 
       Timeline  
Global X Clean 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Global X Clean are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Global X is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
Leverage Shares 2x 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Leverage Shares 2x are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Leverage Shares unveiled solid returns over the last few months and may actually be approaching a breakup point.

Global X and Leverage Shares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global X and Leverage Shares

The main advantage of trading using opposite Global X and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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.
The idea behind Global X Clean and Leverage Shares 2x pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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