Forewarning: this is a complete newbie question :-)
I am starting to learn about ETFs by trying to do the numbers. When learning about the compounding effect in leveraged ETFs, I wanted to simulate the return for a simple ETF. Here is what I wanted to do: a hypothetical index ETF gains 1% every day for a 10-day range. I wanted to calculate the final return after the range for 1X, -1X, 3X and -3X ETF. Here are the numbers:
That means, at the end of 10 days, 1X gained 10.5%, 3X gained 34.4%, -1X lost 10.6% and -3X lost 26.3%. Two questions:
- Is the above statement/calculations correct, specifically w.r.t. -1X and -3X ETFs?
- Now if I consider a scenario where the 1X ETF loses 1% every day for 10 days, then can I say the following without additional calculations: at the end of 10 days, 1X lost 10.6%, 3X lost 26.3%, -1X gained 10.5% and -3X gained 34.4%?
Thanks for helping.