Correlation Between VanEck Crypto and Leverage Shares

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

By analyzing existing cross correlation between VanEck Crypto Blockchain and Leverage Shares 3x, you can compare the effects of market volatilities on VanEck Crypto 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 VanEck Crypto with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Crypto and Leverage Shares.

Diversification Opportunities for VanEck Crypto and Leverage Shares

0.95

Correlation Coefficient

VanEck Crypto  Leverage Shares

Almost no diversification

The 3 months correlation between VanEck and Leverage is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Crypto Blockchain and Leverage Shares 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 3x and VanEck Crypto 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 VanEck Crypto Blockchain 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 3x has no effect on the direction of VanEck Crypto i.e., VanEck Crypto and Leverage Shares go up and down completely randomly.

Pair Corralation between VanEck Crypto and Leverage Shares

Assuming the 90 days trading horizon VanEck Crypto is expected to generate 5.58 times less return on investment than Leverage Shares. But when comparing it to its historical volatility, VanEck Crypto Blockchain is 2.77 times less risky than Leverage Shares. It trades about 0.12 of its potential returns per unit of risk. Leverage Shares 3x is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  212,290  in Leverage Shares 3x on August 25, 2024 and sell it today you would earn a total of  3,109,320  from holding Leverage Shares 3x or generate 1464.66% return on investment over 90 days.

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

VanEck Crypto Blockchain  vs.  Leverage Shares 3x

VanEck Crypto Blockchain

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Crypto Blockchain are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VanEck Crypto unveiled solid returns over the last few months and may actually be approaching a breakup point.

Leverage Shares 3x

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Leverage Shares 3x 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.

Pair Trading with VanEck Crypto and Leverage Shares

The main advantage of trading using opposite VanEck Crypto and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Crypto 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 VanEck Crypto Blockchain and Leverage Shares 3x 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.