Correlation Between Leverage Shares and IShares II
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and IShares II 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 IShares II into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leverage Shares 3x and iShares II Public, you can compare the effects of market volatilities on Leverage Shares and IShares II 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 IShares II. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and IShares II.
Diversification Opportunities for Leverage Shares and IShares II
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Leverage and IShares is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and iShares II Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares II Public 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 3x are associated (or correlated) with IShares II. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares II Public has no effect on the direction of Leverage Shares i.e., Leverage Shares and IShares II go up and down completely randomly.
Pair Corralation between Leverage Shares and IShares II
Assuming the 90 days trading horizon Leverage Shares 3x is expected to under-perform the IShares II. In addition to that, Leverage Shares is 3.35 times more volatile than iShares II Public. It trades about -0.14 of its total potential returns per unit of risk. iShares II Public is currently generating about 0.22 per unit of volatility. If you would invest 144,886 in iShares II Public on August 30, 2024 and sell it today you would earn a total of 13,289 from holding iShares II Public or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Leverage Shares 3x vs. iShares II Public
Performance |
| Timeline |
| Leverage Shares 3x |
| iShares II Public |
Leverage Shares and IShares II Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and IShares II
The main advantage of trading using opposite Leverage Shares and IShares II positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, IShares II 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 IShares II will offset losses from the drop in IShares II'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 |
| IShares II vs. GraniteShares 3x Short | IShares II vs. WisdomTree Natural Gas | IShares II vs. Leverage Shares 3x | IShares II 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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