Correlation Between Vanguard Value and Leverage Shares

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Can any of the company-specific risk be diversified away by investing in both Vanguard Value 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 Vanguard Value and Leverage Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Value Index and Leverage Shares 2X, you can compare the effects of market volatilities on Vanguard Value 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 Vanguard Value with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and Leverage Shares.

Diversification Opportunities for Vanguard Value and Leverage Shares

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Vanguard and Leverage is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index and Leverage Shares 2X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 2X and Vanguard Value 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 Vanguard Value Index 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 2X has no effect on the direction of Vanguard Value i.e., Vanguard Value and Leverage Shares go up and down completely randomly.

Pair Corralation between Vanguard Value and Leverage Shares

Considering the 90-day investment horizon Vanguard Value Index is expected to generate 0.08 times more return on investment than Leverage Shares. However, Vanguard Value Index is 12.16 times less risky than Leverage Shares. It trades about 0.07 of its potential returns per unit of risk. Leverage Shares 2X is currently generating about -0.01 per unit of risk. If you would invest  15,943  in Vanguard Value Index on October 25, 2024 and sell it today you would earn a total of  1,654  from holding Vanguard Value Index or generate 10.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy12.75%
ValuesDaily Returns

Vanguard Value Index  vs.  Leverage Shares 2X

 Performance 
       Timeline  
Vanguard Value Index 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Value Index are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Vanguard Value is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Leverage Shares 2X 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 Value and Leverage Shares Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vanguard Value and Leverage Shares

The main advantage of trading using opposite Vanguard Value and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value 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 Vanguard Value Index and Leverage Shares 2X 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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