Correlation Between Leverage Shares and IShares Core

Can any of the company-specific risk be diversified away by investing in both Leverage Shares and IShares Core 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 Leverage Shares and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Leverage Shares 2x and iShares Core SP, you can compare the effects of market volatilities on Leverage Shares and IShares Core 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 Leverage Shares with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and IShares Core.

Diversification Opportunities for Leverage Shares and IShares Core

-0.66

Correlation Coefficient

Leverage Shares  IShares Core

Excellent diversification

The 3 months correlation between Leverage and IShares is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP and Leverage Shares 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 Leverage Shares 2x are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of Leverage Shares i.e., Leverage Shares and IShares Core go up and down completely randomly.

Pair Corralation between Leverage Shares and IShares Core

Assuming the 90 days trading horizon Leverage Shares 2x is expected to generate 7.63 times more return on investment than IShares Core. However, Leverage Shares is 7.63 times more volatile than iShares Core SP. It trades about 0.04 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.11 per unit of risk. If you would invest  178,425  in Leverage Shares 2x on October 6, 2024 and sell it today you would earn a total of  37,250  from holding Leverage Shares 2x or generate 20.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.37%
Values	Daily Returns

Leverage Shares 2x  vs.  iShares Core SP

Leverage Shares 2x

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leverage Shares 2x has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

iShares Core SP

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Core is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Leverage Shares and IShares Core

The main advantage of trading using opposite Leverage Shares and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.

The idea behind Leverage Shares 2x and iShares Core SP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.