Correlation Between WisdomTree Natural and Lyxor 10Y
Can any of the company-specific risk be diversified away by investing in both WisdomTree Natural and Lyxor 10Y 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 WisdomTree Natural and Lyxor 10Y into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Natural Gas and Lyxor 10Y Inflation, you can compare the effects of market volatilities on WisdomTree Natural and Lyxor 10Y 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 WisdomTree Natural with a short position of Lyxor 10Y. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and Lyxor 10Y.
Diversification Opportunities for WisdomTree Natural and Lyxor 10Y
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between WisdomTree and Lyxor is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and Lyxor 10Y Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor 10Y Inflation and WisdomTree Natural 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 WisdomTree Natural Gas are associated (or correlated) with Lyxor 10Y. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor 10Y Inflation has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and Lyxor 10Y go up and down completely randomly.
Pair Corralation between WisdomTree Natural and Lyxor 10Y
Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to under-perform the Lyxor 10Y. In addition to that, WisdomTree Natural is 46.64 times more volatile than Lyxor 10Y Inflation. It trades about -0.04 of its total potential returns per unit of risk. Lyxor 10Y Inflation is currently generating about -0.02 per unit of volatility. If you would invest 13,073 in Lyxor 10Y Inflation on August 31, 2024 and sell it today you would lose (14.00) from holding Lyxor 10Y Inflation or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
WisdomTree Natural Gas vs. Lyxor 10Y Inflation
Performance |
| Timeline |
| WisdomTree Natural Gas |
| Lyxor 10Y Inflation |
WisdomTree Natural and Lyxor 10Y Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Natural and Lyxor 10Y
The main advantage of trading using opposite WisdomTree Natural and Lyxor 10Y positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Natural position performs unexpectedly, Lyxor 10Y 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 Lyxor 10Y will offset losses from the drop in Lyxor 10Y's long position.| WisdomTree Natural vs. GraniteShares 3x Short | WisdomTree Natural vs. WisdomTree Natural Gas | WisdomTree Natural vs. Leverage Shares 3x | WisdomTree Natural vs. WisdomTree SP 500 |
| Lyxor 10Y vs. Lyxor Smart Overnight | Lyxor 10Y vs. Lyxor UCITS EuroMTS | Lyxor 10Y vs. Lyxor Core UK | Lyxor 10Y vs. Lyxor Core Global |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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