Correlation Between Leverage Shares and WisdomTree Grains

Can any of the company-specific risk be diversified away by investing in both Leverage Shares and WisdomTree Grains 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 WisdomTree Grains 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 WisdomTree Grains, you can compare the effects of market volatilities on Leverage Shares and WisdomTree Grains 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 WisdomTree Grains. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and WisdomTree Grains.

Diversification Opportunities for Leverage Shares and WisdomTree Grains

-0.22

Correlation Coefficient

Leverage Shares  WisdomTree Grains

Very good diversification

The 3 months correlation between Leverage and WisdomTree is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and WisdomTree Grains in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Grains 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 WisdomTree Grains. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Grains has no effect on the direction of Leverage Shares i.e., Leverage Shares and WisdomTree Grains go up and down completely randomly.

Pair Corralation between Leverage Shares and WisdomTree Grains

Assuming the 90 days trading horizon Leverage Shares 2x is expected to generate 15.6 times more return on investment than WisdomTree Grains. However, Leverage Shares is 15.6 times more volatile than WisdomTree Grains. It trades about 0.05 of its potential returns per unit of risk. WisdomTree Grains is currently generating about -0.05 per unit of risk. If you would invest  2,305  in Leverage Shares 2x on October 22, 2024 and sell it today you would earn a total of  2,489  from holding Leverage Shares 2x or generate 107.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Leverage Shares 2x  vs.  WisdomTree Grains

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 comparatively stable basic indicators, Leverage Shares is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

WisdomTree Grains

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Grains are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, WisdomTree Grains 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 WisdomTree Grains

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

The idea behind Leverage Shares 2x and WisdomTree Grains 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.