Correlation Between Leverage Shares and WisdomTree Brent
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and WisdomTree Brent 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 WisdomTree Brent 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 WisdomTree Brent Crude, you can compare the effects of market volatilities on Leverage Shares and WisdomTree Brent 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 WisdomTree Brent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and WisdomTree Brent.
Diversification Opportunities for Leverage Shares and WisdomTree Brent
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leverage and WisdomTree is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and WisdomTree Brent Crude in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Brent Crude 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 WisdomTree Brent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Brent Crude has no effect on the direction of Leverage Shares i.e., Leverage Shares and WisdomTree Brent go up and down completely randomly.
Pair Corralation between Leverage Shares and WisdomTree Brent
Assuming the 90 days trading horizon Leverage Shares 2x is expected to under-perform the WisdomTree Brent. In addition to that, Leverage Shares is 1.26 times more volatile than WisdomTree Brent Crude. It trades about -0.12 of its total potential returns per unit of risk. WisdomTree Brent Crude is currently generating about 0.04 per unit of volatility. If you would invest 2,670 in WisdomTree Brent Crude on September 12, 2024 and sell it today you would earn a total of 53.00 from holding WisdomTree Brent Crude or generate 1.99% 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. WisdomTree Brent Crude
Performance |
| Timeline |
| Leverage Shares 2x |
| WisdomTree Brent Crude |
Leverage Shares and WisdomTree Brent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and WisdomTree Brent
The main advantage of trading using opposite Leverage Shares and WisdomTree Brent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, WisdomTree Brent 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 WisdomTree Brent will offset losses from the drop in WisdomTree Brent's long position.| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
| WisdomTree Brent vs. WisdomTree Natural Gas | WisdomTree Brent vs. Leverage Shares 3x | WisdomTree Brent vs. GraniteShares 3x Short | WisdomTree Brent 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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