Correlation Between IShares Core and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 IShares Core and Leverage Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and Leverage Shares 2x, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Leverage Shares.
Diversification Opportunities for IShares Core and Leverage Shares
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and Leverage is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI 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 IShares Core 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 iShares Core MSCI 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 IShares Core i.e., IShares Core and Leverage Shares go up and down completely randomly.
Pair Corralation between IShares Core and Leverage Shares
Assuming the 90 days trading horizon IShares Core is expected to generate 31.38 times less return on investment than Leverage Shares. But when comparing it to its historical volatility, iShares Core MSCI is 53.83 times less risky than Leverage Shares. It trades about 0.09 of its potential returns per unit of risk. Leverage Shares 2x is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 17,888 in Leverage Shares 2x on September 12, 2024 and sell it today you would lose (14,801) from holding Leverage Shares 2x or give up 82.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. Leverage Shares 2x
Performance |
| Timeline |
| iShares Core MSCI |
| Leverage Shares 2x |
IShares Core and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Leverage Shares
The main advantage of trading using opposite IShares Core and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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.| IShares Core vs. SPDR Dow Jones | IShares Core vs. iShares SP 500 | IShares Core vs. Vanguard FTSE All World | IShares Core vs. iShares Core MSCI |
| Leverage Shares vs. SPDR Dow Jones | Leverage Shares vs. iShares Core MSCI | Leverage Shares vs. iShares SP 500 | Leverage Shares vs. Vanguard FTSE All World |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |