Correlation Between WisdomTree and Lyxor 10Y
Can any of the company-specific risk be diversified away by investing in both WisdomTree 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 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 SP 500 and Lyxor 10Y Inflation, you can compare the effects of market volatilities on WisdomTree 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 with a short position of Lyxor 10Y. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree and Lyxor 10Y.
Diversification Opportunities for WisdomTree and Lyxor 10Y
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between WisdomTree and Lyxor is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SP 500 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 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 SP 500 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 i.e., WisdomTree and Lyxor 10Y go up and down completely randomly.
Pair Corralation between WisdomTree and Lyxor 10Y
Assuming the 90 days trading horizon WisdomTree SP 500 is expected to generate 10.76 times more return on investment than Lyxor 10Y. However, WisdomTree is 10.76 times more volatile than Lyxor 10Y Inflation. It trades about 0.11 of its potential returns per unit of risk. Lyxor 10Y Inflation is currently generating about 0.12 per unit of risk. If you would invest 11,104 in WisdomTree SP 500 on August 24, 2024 and sell it today you would earn a total of 625.00 from holding WisdomTree SP 500 or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree SP 500 vs. Lyxor 10Y Inflation
Performance |
| Timeline |
| WisdomTree SP 500 |
| Lyxor 10Y Inflation |
WisdomTree and Lyxor 10Y Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree and Lyxor 10Y
The main advantage of trading using opposite WisdomTree and Lyxor 10Y positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree 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 vs. Leverage Shares 3x | WisdomTree vs. WisdomTree SP 500 | WisdomTree vs. WisdomTree Silver 3x | WisdomTree vs. Leverage Shares 3x |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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