Correlation Between UBS ETF and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both UBS ETF 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 UBS ETF and Leverage Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS ETF plc and Leverage Shares 3x, you can compare the effects of market volatilities on UBS ETF 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 UBS ETF with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETF and Leverage Shares.
Diversification Opportunities for UBS ETF and Leverage Shares
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between UBS and Leverage is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETF plc 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 UBS ETF 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 UBS ETF plc 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 UBS ETF i.e., UBS ETF and Leverage Shares go up and down completely randomly.
Pair Corralation between UBS ETF and Leverage Shares
Assuming the 90 days trading horizon UBS ETF is expected to generate 3.61 times less return on investment than Leverage Shares. But when comparing it to its historical volatility, UBS ETF plc is 9.07 times less risky than Leverage Shares. It trades about 0.11 of its potential returns per unit of risk. Leverage Shares 3x is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,447 in Leverage Shares 3x on August 27, 2024 and sell it today you would earn a total of 706.00 from holding Leverage Shares 3x or generate 28.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS ETF plc vs. Leverage Shares 3x
Performance |
| Timeline |
| UBS ETF plc |
| Leverage Shares 3x |
UBS ETF and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS ETF and Leverage Shares
The main advantage of trading using opposite UBS ETF and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETF 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.| UBS ETF vs. Leverage Shares 3x | UBS ETF vs. Leverage Shares 3x | UBS ETF vs. Leverage Shares 3x | UBS ETF vs. WisdomTree Short GBP |
| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. WisdomTree SP 500 | Leverage Shares vs. WisdomTree Silver 3x | Leverage Shares vs. Lyxor 10Y Inflation |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |