Correlation Between Leverage Shares and Amundi Index

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

Diversification Opportunities for Leverage Shares and Amundi Index

0.03

Correlation Coefficient

Leverage Shares  Amundi Index

Significant diversification

The 3 months correlation between Leverage and Amundi is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and Amundi Index Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Index Solutions 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 Amundi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Index Solutions has no effect on the direction of Leverage Shares i.e., Leverage Shares and Amundi Index go up and down completely randomly.

Pair Corralation between Leverage Shares and Amundi Index

Assuming the 90 days trading horizon Leverage Shares 2x is expected to generate 3.72 times more return on investment than Amundi Index. However, Leverage Shares is 3.72 times more volatile than Amundi Index Solutions. It trades about 0.1 of its potential returns per unit of risk. Amundi Index Solutions is currently generating about 0.06 per unit of risk. If you would invest  4,420  in Leverage Shares 2x on September 12, 2024 and sell it today you would earn a total of  1,199  from holding Leverage Shares 2x or generate 27.13% return on investment over 90 days.

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

Leverage Shares 2x  vs.  Amundi Index Solutions

Leverage Shares 2x

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Leverage Shares 2x are ranked lower than 8 (%) 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.

Amundi Index Solutions

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Index Solutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Amundi Index 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 Amundi Index

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

The idea behind Leverage Shares 2x and Amundi Index Solutions 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.