Correlation Between Leverage Shares and Xtrackers ESG
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and Xtrackers ESG 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 Xtrackers ESG 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 Xtrackers ESG USD, you can compare the effects of market volatilities on Leverage Shares and Xtrackers ESG 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 Xtrackers ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and Xtrackers ESG.
Diversification Opportunities for Leverage Shares and Xtrackers ESG
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leverage and Xtrackers is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and Xtrackers ESG USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers ESG USD 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 Xtrackers ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers ESG USD has no effect on the direction of Leverage Shares i.e., Leverage Shares and Xtrackers ESG go up and down completely randomly.
Pair Corralation between Leverage Shares and Xtrackers ESG
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 52.57 times more return on investment than Xtrackers ESG. However, Leverage Shares is 52.57 times more volatile than Xtrackers ESG USD. It trades about 0.18 of its potential returns per unit of risk. Xtrackers ESG USD is currently generating about 0.05 per unit of risk. If you would invest 1,269,945 in Leverage Shares 3x on October 11, 2024 and sell it today you would earn a total of 2,181,075 from holding Leverage Shares 3x or generate 171.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Leverage Shares 3x vs. Xtrackers ESG USD
Performance |
Timeline |
Leverage Shares 3x |
Xtrackers ESG USD |
Leverage Shares and Xtrackers ESG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Leverage Shares and Xtrackers ESG
The main advantage of trading using opposite Leverage Shares and Xtrackers ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, Xtrackers ESG 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 Xtrackers ESG will offset losses from the drop in Xtrackers ESG's long position.Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
Xtrackers ESG vs. Xtrackers MSCI | Xtrackers ESG vs. Xtrackers FTSE 250 | Xtrackers ESG vs. Xtrackers Ie Plc | Xtrackers ESG vs. Xtrackers Russell 2000 |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Stocks Directory Find actively traded stocks across global markets | |
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance |