Correlation Between Global X and Leverage Shares

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

By analyzing existing cross correlation between Global X Blockchain and Leverage Shares 3x, you can compare the effects of market volatilities on Global X and Leverage Shares 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 Global X with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Leverage Shares.

Diversification Opportunities for Global X and Leverage Shares

0.31

Correlation Coefficient

Global X  Leverage Shares

Weak diversification

The 3 months correlation between Global and Leverage is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Global X Blockchain and Leverage Shares 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 3x and Global X 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 Global X Blockchain are associated (or correlated) with Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 3x has no effect on the direction of Global X i.e., Global X and Leverage Shares go up and down completely randomly.

Pair Corralation between Global X and Leverage Shares

Assuming the 90 days trading horizon Global X Blockchain is expected to under-perform the Leverage Shares. But the etf apears to be less risky and, when comparing its historical volatility, Global X Blockchain is 1.55 times less risky than Leverage Shares. The etf trades about -0.08 of its potential returns per unit of risk. The Leverage Shares 3x is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,196  in Leverage Shares 3x on December 2, 2024 and sell it today you would lose (379.00) from holding Leverage Shares 3x or give up 11.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.67%
Values	Daily Returns

Global X Blockchain  vs.  Leverage Shares 3x

Global X Blockchain

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global X Blockchain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Leverage Shares 3x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leverage Shares 3x 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.

Pair Trading with Global X and Leverage Shares

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

The idea behind Global X Blockchain and Leverage Shares 3x 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.