Correlation Between Leverage Shares and PowerShares Preferred
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and PowerShares Preferred 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 Preferred 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 Preferred Shares, you can compare the effects of market volatilities on Leverage Shares and PowerShares Preferred 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 Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and PowerShares Preferred.
Diversification Opportunities for Leverage Shares and PowerShares Preferred
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Leverage and PowerShares is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 5x and PowerShares Preferred Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PowerShares Preferred 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 Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PowerShares Preferred has no effect on the direction of Leverage Shares i.e., Leverage Shares and PowerShares Preferred go up and down completely randomly.
Pair Corralation between Leverage Shares and PowerShares Preferred
Assuming the 90 days trading horizon Leverage Shares 5x is expected to generate 7.42 times more return on investment than PowerShares Preferred. However, Leverage Shares is 7.42 times more volatile than PowerShares Preferred Shares. It trades about 0.28 of its potential returns per unit of risk. PowerShares Preferred Shares is currently generating about 0.02 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 | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Leverage Shares 5x vs. PowerShares Preferred Shares
Performance |
Timeline |
Leverage Shares 5x |
PowerShares Preferred |
Leverage Shares and PowerShares Preferred Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Leverage Shares and PowerShares Preferred
The main advantage of trading using opposite Leverage Shares and PowerShares Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, PowerShares Preferred 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 Preferred will offset losses from the drop in PowerShares Preferred's long position.Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
PowerShares Preferred vs. PowerShares Emerging Markets | PowerShares Preferred vs. PowerShares EURO STOXX | PowerShares Preferred vs. PowerShares FTSE RAFI | PowerShares Preferred vs. PowerShares EURO STOXX |
Check out your portfolio center.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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
CEOs Directory Screen CEOs from public companies around the world | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |