Correlation Between Accion IBEX and Lyxor Ibex
Can any of the company-specific risk be diversified away by investing in both Accion IBEX and Lyxor Ibex 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 Accion IBEX and Lyxor Ibex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accion IBEX 35 and Lyxor Ibex 35, you can compare the effects of market volatilities on Accion IBEX and Lyxor Ibex 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 Accion IBEX with a short position of Lyxor Ibex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accion IBEX and Lyxor Ibex.
Diversification Opportunities for Accion IBEX and Lyxor Ibex
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Accion and Lyxor is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Accion IBEX 35 and Lyxor Ibex 35 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Ibex 35 and Accion IBEX 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 Accion IBEX 35 are associated (or correlated) with Lyxor Ibex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Ibex 35 has no effect on the direction of Accion IBEX i.e., Accion IBEX and Lyxor Ibex go up and down completely randomly.
Pair Corralation between Accion IBEX and Lyxor Ibex
Assuming the 90 days trading horizon Accion IBEX is expected to generate 1.91 times less return on investment than Lyxor Ibex. But when comparing it to its historical volatility, Accion IBEX 35 is 1.92 times less risky than Lyxor Ibex. It trades about 0.14 of its potential returns per unit of risk. Lyxor Ibex 35 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,763 in Lyxor Ibex 35 on November 28, 2024 and sell it today you would earn a total of 1,829 from holding Lyxor Ibex 35 or generate 103.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.94% |
| Values | Daily Returns |
Accion IBEX 35 vs. Lyxor Ibex 35
Performance |
| Timeline |
| Accion IBEX 35 |
| Lyxor Ibex 35 |
Accion IBEX and Lyxor Ibex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Accion IBEX and Lyxor Ibex
The main advantage of trading using opposite Accion IBEX and Lyxor Ibex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accion IBEX position performs unexpectedly, Lyxor Ibex 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 Ibex will offset losses from the drop in Lyxor Ibex's long position.The idea behind Accion IBEX 35 and Lyxor Ibex 35 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.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |