Correlation Between Leverage Shares and Vanguard Global

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

Diversification Opportunities for Leverage Shares and Vanguard Global

-0.05

Correlation Coefficient

Leverage Shares  Vanguard Global

Good diversification

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

Pair Corralation between Leverage Shares and Vanguard Global

Assuming the 90 days trading horizon Leverage Shares 2x is expected to generate 16.77 times more return on investment than Vanguard Global. However, Leverage Shares is 16.77 times more volatile than Vanguard Global Aggregate. It trades about 0.22 of its potential returns per unit of risk. Vanguard Global Aggregate is currently generating about -0.32 per unit of risk. If you would invest  5,657  in Leverage Shares 2x on October 9, 2024 and sell it today you would earn a total of  1,071  from holding Leverage Shares 2x or generate 18.93% return on investment over 90 days.

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

Leverage Shares 2x  vs.  Vanguard Global Aggregate

Leverage Shares 2x

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Leverage Shares 2x are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. 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.

Vanguard Global Aggregate

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Leverage Shares 2x and Vanguard Global Aggregate 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.