Correlation Between IShares MSCI and Leverage Shares

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

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

Diversification Opportunities for IShares MSCI and Leverage Shares

0.35

Correlation Coefficient

IShares MSCI  Leverage Shares

Weak diversification

The 3 months correlation between IShares and Leverage is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Japan 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 IShares MSCI 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 iShares MSCI Japan 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 IShares MSCI i.e., IShares MSCI and Leverage Shares go up and down completely randomly.

Pair Corralation between IShares MSCI and Leverage Shares

If you would invest  307,436  in iShares MSCI Japan on October 4, 2024 and sell it today you would earn a total of  25,614  from holding iShares MSCI Japan or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

iShares MSCI Japan  vs.  Leverage Shares 3x

iShares MSCI Japan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI Japan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares MSCI is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Leverage Shares 3x

Risk-Adjusted Performance

0 of 100

OK

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 comparatively weak basic indicators, Leverage Shares unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares MSCI and Leverage Shares

The main advantage of trading using opposite IShares MSCI and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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 iShares MSCI Japan 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.