Correlation Between Leverage Shares and Edinburgh Worldwide

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

Diversification Opportunities for Leverage Shares and Edinburgh Worldwide

0.79

Correlation Coefficient

Leverage Shares  Edinburgh Worldwide

Poor diversification

The 3 months correlation between Leverage and Edinburgh is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and Edinburgh Worldwide Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edinburgh Worldwide 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 Edinburgh Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edinburgh Worldwide has no effect on the direction of Leverage Shares i.e., Leverage Shares and Edinburgh Worldwide go up and down completely randomly.

Pair Corralation between Leverage Shares and Edinburgh Worldwide

Assuming the 90 days trading horizon Leverage Shares 2x is expected to generate 11.03 times more return on investment than Edinburgh Worldwide. However, Leverage Shares is 11.03 times more volatile than Edinburgh Worldwide Investment. It trades about 0.05 of its potential returns per unit of risk. Edinburgh Worldwide Investment is currently generating about 0.02 per unit of risk. If you would invest  1,990  in Leverage Shares 2x on October 4, 2024 and sell it today you would earn a total of  3,797  from holding Leverage Shares 2x or generate 190.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Leverage Shares 2x  vs.  Edinburgh Worldwide Investment

Leverage Shares 2x

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leverage Shares 2x are ranked lower than 15 (%) 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.

Edinburgh Worldwide

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Edinburgh Worldwide Investment are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Edinburgh Worldwide exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Leverage Shares and Edinburgh Worldwide

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

The idea behind Leverage Shares 2x and Edinburgh Worldwide Investment 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.