Correlation Between SP 500 and LS 1x
Can any of the company-specific risk be diversified away by investing in both SP 500 and LS 1x 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 SP 500 and LS 1x into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP 500 VIX and LS 1x Coinbase, you can compare the effects of market volatilities on SP 500 and LS 1x 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 SP 500 with a short position of LS 1x. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP 500 and LS 1x.
Diversification Opportunities for SP 500 and LS 1x
Pay attention - limited upside
The 3 months correlation between VILX and COI1 is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding SP 500 VIX and LS 1x Coinbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS 1x Coinbase and SP 500 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 SP 500 VIX are associated (or correlated) with LS 1x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS 1x Coinbase has no effect on the direction of SP 500 i.e., SP 500 and LS 1x go up and down completely randomly.
Pair Corralation between SP 500 and LS 1x
Assuming the 90 days trading horizon SP 500 is expected to generate 2.07 times less return on investment than LS 1x. In addition to that, SP 500 is 1.97 times more volatile than LS 1x Coinbase. It trades about 0.02 of its total potential returns per unit of risk. LS 1x Coinbase is currently generating about 0.07 per unit of volatility. If you would invest 610.00 in LS 1x Coinbase on November 7, 2024 and sell it today you would earn a total of 25.00 from holding LS 1x Coinbase or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
SP 500 VIX vs. LS 1x Coinbase
Performance |
| Timeline |
| SP 500 VIX |
| LS 1x Coinbase |
SP 500 and LS 1x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP 500 and LS 1x
The main advantage of trading using opposite SP 500 and LS 1x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP 500 position performs unexpectedly, LS 1x 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 LS 1x will offset losses from the drop in LS 1x's long position.| SP 500 vs. iShares MSCI Japan | SP 500 vs. Amundi EUR High | SP 500 vs. iShares JP Morgan | SP 500 vs. Xtrackers MSCI |
| LS 1x vs. iShares MSCI Japan | LS 1x vs. Amundi EUR High | LS 1x vs. iShares JP Morgan | LS 1x vs. Xtrackers MSCI |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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