Correlation Between Leverage Shares and Franklin LibertyQ

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

Diversification Opportunities for Leverage Shares and Franklin LibertyQ

0.3

Correlation Coefficient

Leverage Shares  Franklin LibertyQ

Weak diversification

The 3 months correlation between Leverage and Franklin is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x and Franklin LibertyQ AC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin LibertyQ 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 Franklin LibertyQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin LibertyQ has no effect on the direction of Leverage Shares i.e., Leverage Shares and Franklin LibertyQ go up and down completely randomly.

Pair Corralation between Leverage Shares and Franklin LibertyQ

Assuming the 90 days trading horizon Leverage Shares 2x is expected to generate 5.88 times more return on investment than Franklin LibertyQ. However, Leverage Shares is 5.88 times more volatile than Franklin LibertyQ AC. It trades about 0.0 of its potential returns per unit of risk. Franklin LibertyQ AC is currently generating about 0.01 per unit of risk. If you would invest  5,859  in Leverage Shares 2x on September 5, 2024 and sell it today you would lose (77.00) from holding Leverage Shares 2x or give up 1.31% of portfolio value over 90 days.

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

Leverage Shares 2x  vs.  Franklin LibertyQ AC

Leverage Shares 2x

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leverage Shares 2x are ranked lower than 13 (%) 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.

Franklin LibertyQ

Risk-Adjusted Performance

4 of 100

Insignificant

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

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

The idea behind Leverage Shares 2x and Franklin LibertyQ AC 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.