Correlation Between Leverage Shares and Vanguard Total

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

Diversification Opportunities for Leverage Shares and Vanguard Total

0.13

Correlation Coefficient

Leverage Shares  Vanguard Total

Average diversification

The 3 months correlation between Leverage and Vanguard is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2X and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock 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 Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Leverage Shares i.e., Leverage Shares and Vanguard Total go up and down completely randomly.

Pair Corralation between Leverage Shares and Vanguard Total

Given the investment horizon of 90 days Leverage Shares 2X is expected to under-perform the Vanguard Total. In addition to that, Leverage Shares is 9.52 times more volatile than Vanguard Total Stock. It trades about -0.01 of its total potential returns per unit of risk. Vanguard Total Stock is currently generating about 0.1 per unit of volatility. If you would invest  28,462  in Vanguard Total Stock on October 25, 2024 and sell it today you would earn a total of  1,556  from holding Vanguard Total Stock or generate 5.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	43.33%
Values	Daily Returns

Leverage Shares 2X  vs.  Vanguard Total Stock

Leverage Shares 2X

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leverage Shares 2X has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Vanguard Total Stock

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Total Stock are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Leverage Shares and Vanguard Total

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

The idea behind Leverage Shares 2X and Vanguard Total Stock 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.