Correlation Between Leverage Shares and PowerShares Emerging

Can any of the company-specific risk be diversified away by investing in both Leverage Shares and PowerShares Emerging 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 PowerShares Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Leverage Shares 5x and PowerShares Emerging Markets, you can compare the effects of market volatilities on Leverage Shares and PowerShares Emerging 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 PowerShares Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and PowerShares Emerging.

Diversification Opportunities for Leverage Shares and PowerShares Emerging

0.91

Correlation Coefficient

Leverage Shares  PowerShares Emerging

Almost no diversification

The 3 months correlation between Leverage and PowerShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 5x and PowerShares Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerShares Emerging 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 5x are associated (or correlated) with PowerShares Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerShares Emerging has no effect on the direction of Leverage Shares i.e., Leverage Shares and PowerShares Emerging go up and down completely randomly.

Pair Corralation between Leverage Shares and PowerShares Emerging

Assuming the 90 days trading horizon Leverage Shares 5x is expected to generate 15.27 times more return on investment than PowerShares Emerging. However, Leverage Shares is 15.27 times more volatile than PowerShares Emerging Markets. It trades about 0.28 of its potential returns per unit of risk. PowerShares Emerging Markets is currently generating about 0.17 per unit of risk. If you would invest  67.00  in Leverage Shares 5x on April 25, 2025 and sell it today you would earn a total of  78.00  from holding Leverage Shares 5x or generate 116.42% return on investment over 90 days.

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

Leverage Shares 5x  vs.  PowerShares Emerging Markets

Leverage Shares 5x

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Leverage Shares 5x are ranked lower than 22 (%) 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.

PowerShares Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PowerShares Emerging Markets are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PowerShares Emerging 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 PowerShares Emerging

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

The idea behind Leverage Shares 5x and PowerShares Emerging Markets 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.