Correlation Between JPM BetaBuilders and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both JPM BetaBuilders 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 JPM BetaBuilders and Leverage Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPM BetaBuilders Treasury and Leverage Shares 2x, you can compare the effects of market volatilities on JPM BetaBuilders 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 JPM BetaBuilders with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM BetaBuilders and Leverage Shares.
Diversification Opportunities for JPM BetaBuilders and Leverage Shares
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between JPM and Leverage is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding JPM BetaBuilders Treasury 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 JPM BetaBuilders 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 JPM BetaBuilders Treasury 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 JPM BetaBuilders i.e., JPM BetaBuilders and Leverage Shares go up and down completely randomly.
Pair Corralation between JPM BetaBuilders and Leverage Shares
Assuming the 90 days trading horizon JPM BetaBuilders is expected to generate 10.33 times less return on investment than Leverage Shares. But when comparing it to its historical volatility, JPM BetaBuilders Treasury is 8.2 times less risky than Leverage Shares. It trades about 0.05 of its potential returns per unit of risk. Leverage Shares 2x is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 417,500 in Leverage Shares 2x on September 12, 2024 and sell it today you would earn a total of 325,850 from holding Leverage Shares 2x or generate 78.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
JPM BetaBuilders Treasury vs. Leverage Shares 2x
Performance |
| Timeline |
| JPM BetaBuilders Treasury |
| Leverage Shares 2x |
JPM BetaBuilders and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPM BetaBuilders and Leverage Shares
The main advantage of trading using opposite JPM BetaBuilders and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPM BetaBuilders 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.| JPM BetaBuilders vs. JPM BetaBuilders China | JPM BetaBuilders vs. JPM AC Asia | JPM BetaBuilders vs. JPM Research Enhanced | JPM BetaBuilders vs. JPM Global Research |
| Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. GraniteShares 3x Short | Leverage Shares vs. WisdomTree Natural Gas |
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 Stocks Directory module to find actively traded stocks across global markets.
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