Correlation Between IShares JP and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both IShares JP 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 JP 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 JP Morgan and Leverage Shares 2x, you can compare the effects of market volatilities on IShares JP 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 JP with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares JP and Leverage Shares.
Diversification Opportunities for IShares JP and Leverage Shares
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and Leverage is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding iShares JP Morgan 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 JP 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 JP Morgan 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 JP i.e., IShares JP and Leverage Shares go up and down completely randomly.
Pair Corralation between IShares JP and Leverage Shares
Assuming the 90 days trading horizon IShares JP is expected to generate 102.97 times less return on investment than Leverage Shares. But when comparing it to its historical volatility, iShares JP Morgan is 16.34 times less risky than Leverage Shares. It trades about 0.02 of its potential returns per unit of risk. Leverage Shares 2x is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,539 in Leverage Shares 2x on August 28, 2024 and sell it today you would earn a total of 4,182 from holding Leverage Shares 2x or generate 271.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares JP Morgan vs. Leverage Shares 2x
Performance |
| Timeline |
| iShares JP Morgan |
| Leverage Shares 2x |
IShares JP and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares JP and Leverage Shares
The main advantage of trading using opposite IShares JP and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares JP 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 JP vs. iShares MSCI Japan | IShares JP vs. iShares MSCI Europe | IShares JP vs. iShares Nasdaq Biotechnology | IShares JP vs. iShares Global Corp |
| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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