Correlation Between LG Battery and Lyxor MSCI
Can any of the company-specific risk be diversified away by investing in both LG Battery and Lyxor MSCI 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 LG Battery and Lyxor MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Battery Value Chain and Lyxor MSCI India, you can compare the effects of market volatilities on LG Battery and Lyxor MSCI 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 LG Battery with a short position of Lyxor MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Battery and Lyxor MSCI.
Diversification Opportunities for LG Battery and Lyxor MSCI
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BATT and Lyxor is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding LG Battery Value Chain and Lyxor MSCI India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor MSCI India and LG Battery 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 LG Battery Value Chain are associated (or correlated) with Lyxor MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor MSCI India has no effect on the direction of LG Battery i.e., LG Battery and Lyxor MSCI go up and down completely randomly.
Pair Corralation between LG Battery and Lyxor MSCI
Assuming the 90 days trading horizon LG Battery Value Chain is expected to under-perform the Lyxor MSCI. In addition to that, LG Battery is 1.39 times more volatile than Lyxor MSCI India. It trades about 0.0 of its total potential returns per unit of risk. Lyxor MSCI India is currently generating about 0.07 per unit of volatility. If you would invest 2,495 in Lyxor MSCI India on August 31, 2024 and sell it today you would earn a total of 806.00 from holding Lyxor MSCI India or generate 32.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Battery Value Chain vs. Lyxor MSCI India
Performance |
| Timeline |
| LG Battery Value |
| Lyxor MSCI India |
LG Battery and Lyxor MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Battery and Lyxor MSCI
The main advantage of trading using opposite LG Battery and Lyxor MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Battery position performs unexpectedly, Lyxor MSCI 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 MSCI will offset losses from the drop in Lyxor MSCI's long position.The idea behind LG Battery Value Chain and Lyxor MSCI India 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.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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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