Correlation Between Vanguard FTSE and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE 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 Vanguard FTSE and Leverage Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard FTSE Developed and Leverage Shares 3x, you can compare the effects of market volatilities on Vanguard FTSE 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 Vanguard FTSE with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Leverage Shares.
Diversification Opportunities for Vanguard FTSE and Leverage Shares
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Leverage is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Developed 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 Vanguard FTSE 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 Vanguard FTSE Developed 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 Vanguard FTSE i.e., Vanguard FTSE and Leverage Shares go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Leverage Shares
Assuming the 90 days trading horizon Vanguard FTSE Developed is expected to generate 0.11 times more return on investment than Leverage Shares. However, Vanguard FTSE Developed is 8.79 times less risky than Leverage Shares. It trades about 0.05 of its potential returns per unit of risk. Leverage Shares 3x is currently generating about -0.03 per unit of risk. If you would invest 3,847 in Vanguard FTSE Developed on September 26, 2024 and sell it today you would earn a total of 807.00 from holding Vanguard FTSE Developed or generate 20.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Vanguard FTSE Developed vs. Leverage Shares 3x
Performance |
| Timeline |
| Vanguard FTSE Developed |
| Leverage Shares 3x |
Vanguard FTSE and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Leverage Shares
The main advantage of trading using opposite Vanguard FTSE and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE 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.| Vanguard FTSE vs. SP 500 VIX | Vanguard FTSE vs. Leverage Shares 3x | Vanguard FTSE vs. Leverage Shares 3x | Vanguard FTSE vs. WisdomTree Natural Gas |
| Leverage Shares vs. Vanguard FTSE Developed | Leverage Shares vs. Amundi Index Solutions | Leverage Shares vs. Amundi Index Solutions | Leverage Shares vs. Albion Venture Capital |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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