Correlation Between LG Russell and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both LG Russell 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 LG Russell and Leverage Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Russell 2000 and Leverage Shares 3x, you can compare the effects of market volatilities on LG Russell 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 LG Russell with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Russell and Leverage Shares.
Diversification Opportunities for LG Russell and Leverage Shares
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between RTWO and Leverage is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding LG Russell 2000 and Leverage Shares 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 3x and LG Russell 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 LG Russell 2000 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 3x has no effect on the direction of LG Russell i.e., LG Russell and Leverage Shares go up and down completely randomly.
Pair Corralation between LG Russell and Leverage Shares
Assuming the 90 days trading horizon LG Russell is expected to generate 44.74 times less return on investment than Leverage Shares. But when comparing it to its historical volatility, LG Russell 2000 is 13.3 times less risky than Leverage Shares. It trades about 0.04 of its potential returns per unit of risk. Leverage Shares 3x is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 699.00 in Leverage Shares 3x on December 4, 2024 and sell it today you would earn a total of 66,301 from holding Leverage Shares 3x or generate 9485.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.37% |
| Values | Daily Returns |
LG Russell 2000 vs. Leverage Shares 3x
Performance |
| Timeline |
| LG Russell 2000 |
| Leverage Shares 3x |
LG Russell and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Russell and Leverage Shares
The main advantage of trading using opposite LG Russell and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Russell 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.| LG Russell vs. iShares MSCI EM | LG Russell vs. VanEck Multi Asset Growth | LG Russell vs. iShares III Public | LG Russell vs. iShares Core MSCI |
| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 2x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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