Correlation Between BlackRock ESG and Leverage Shares

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

By analyzing existing cross correlation between BlackRock ESG Capital and Leverage Shares 2X, you can compare the effects of market volatilities on BlackRock ESG 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 BlackRock ESG with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock ESG and Leverage Shares.

Diversification Opportunities for BlackRock ESG and Leverage Shares

0.28

Correlation Coefficient

BlackRock ESG  Leverage Shares

Modest diversification

The 3 months correlation between BlackRock and Leverage is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock ESG Capital 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 BlackRock ESG 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 BlackRock ESG Capital 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 BlackRock ESG i.e., BlackRock ESG and Leverage Shares go up and down completely randomly.

Pair Corralation between BlackRock ESG and Leverage Shares

Given the investment horizon of 90 days BlackRock ESG is expected to generate 3.61 times less return on investment than Leverage Shares. But when comparing it to its historical volatility, BlackRock ESG Capital is 5.27 times less risky than Leverage Shares. It trades about 0.26 of its potential returns per unit of risk. Leverage Shares 2X is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,416  in Leverage Shares 2X on May 7, 2025 and sell it today you would earn a total of  318.00  from holding Leverage Shares 2X or generate 22.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	57.38%
Values	Daily Returns

BlackRock ESG Capital  vs.  Leverage Shares 2X

BlackRock ESG Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock ESG Capital are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BlackRock ESG may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Leverage Shares 2X

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Leverage Shares 2X are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Leverage Shares reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock ESG and Leverage Shares

The main advantage of trading using opposite BlackRock ESG and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock ESG 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 BlackRock ESG Capital 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.