Correlation Between Leverage Shares and JPM BetaBuilders

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

By analyzing existing cross correlation between Leverage Shares 3x and JPM BetaBuilders UK, you can compare the effects of market volatilities on Leverage Shares and JPM BetaBuilders 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 JPM BetaBuilders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and JPM BetaBuilders.

Diversification Opportunities for Leverage Shares and JPM BetaBuilders

0.2

Correlation Coefficient

Leverage Shares  JPM BetaBuilders

Modest diversification

The 3 months correlation between Leverage and JPM is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and JPM BetaBuilders UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPM BetaBuilders 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 3x are associated (or correlated) with JPM BetaBuilders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPM BetaBuilders has no effect on the direction of Leverage Shares i.e., Leverage Shares and JPM BetaBuilders go up and down completely randomly.

Pair Corralation between Leverage Shares and JPM BetaBuilders

Assuming the 90 days trading horizon Leverage Shares 3x is expected to under-perform the JPM BetaBuilders. In addition to that, Leverage Shares is 82.21 times more volatile than JPM BetaBuilders UK. It trades about -0.12 of its total potential returns per unit of risk. JPM BetaBuilders UK is currently generating about -0.17 per unit of volatility. If you would invest  9,369  in JPM BetaBuilders UK on October 11, 2024 and sell it today you would lose (40.00) from holding JPM BetaBuilders UK or give up 0.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Leverage Shares 3x  vs.  JPM BetaBuilders UK

Leverage Shares 3x

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leverage Shares 3x are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Leverage Shares unveiled solid returns over the last few months and may actually be approaching a breakup point.

JPM BetaBuilders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JPM BetaBuilders UK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, JPM BetaBuilders 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 JPM BetaBuilders

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

The idea behind Leverage Shares 3x and JPM BetaBuilders UK 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.