Correlation Between Leverage Shares and Xtrackers MSCI

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

Diversification Opportunities for Leverage Shares and Xtrackers MSCI

-0.05

Correlation Coefficient

Leverage Shares  Xtrackers MSCI

Good diversification

The 3 months correlation between Leverage and Xtrackers is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and Xtrackers MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI has no effect on the direction of Leverage Shares i.e., Leverage Shares and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between Leverage Shares and Xtrackers MSCI

Assuming the 90 days trading horizon Leverage Shares 2x is expected to under-perform the Xtrackers MSCI. In addition to that, Leverage Shares is 3.86 times more volatile than Xtrackers MSCI. It trades about -0.39 of its total potential returns per unit of risk. Xtrackers MSCI is currently generating about -0.12 per unit of volatility. If you would invest  4,739  in Xtrackers MSCI on October 25, 2024 and sell it today you would lose (104.00) from holding Xtrackers MSCI or give up 2.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Leverage Shares 2x  vs.  Xtrackers MSCI

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 latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Xtrackers MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Leverage Shares 2x and Xtrackers MSCI 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.