Correlation Between Lyxor Commodities and HSBC Emerging
Can any of the company-specific risk be diversified away by investing in both Lyxor Commodities and HSBC Emerging 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 Lyxor Commodities and HSBC Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor Commodities RefinitivCoreCommodity and HSBC Emerging Market, you can compare the effects of market volatilities on Lyxor Commodities and HSBC Emerging 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 Lyxor Commodities with a short position of HSBC Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor Commodities and HSBC Emerging.
Diversification Opportunities for Lyxor Commodities and HSBC Emerging
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lyxor and HSBC is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor Commodities RefinitivCor and HSBC Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Emerging Market and Lyxor Commodities 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 Lyxor Commodities RefinitivCoreCommodity are associated (or correlated) with HSBC Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Emerging Market has no effect on the direction of Lyxor Commodities i.e., Lyxor Commodities and HSBC Emerging go up and down completely randomly.
Pair Corralation between Lyxor Commodities and HSBC Emerging
Assuming the 90 days trading horizon Lyxor Commodities RefinitivCoreCommodity is expected to generate 1.22 times more return on investment than HSBC Emerging. However, Lyxor Commodities is 1.22 times more volatile than HSBC Emerging Market. It trades about 0.03 of its potential returns per unit of risk. HSBC Emerging Market is currently generating about -0.11 per unit of risk. If you would invest 2,284 in Lyxor Commodities RefinitivCoreCommodity on August 31, 2024 and sell it today you would earn a total of 12.00 from holding Lyxor Commodities RefinitivCoreCommodity or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor Commodities RefinitivCor vs. HSBC Emerging Market
Performance |
| Timeline |
| Lyxor Commodities |
| HSBC Emerging Market |
Lyxor Commodities and HSBC Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor Commodities and HSBC Emerging
The main advantage of trading using opposite Lyxor Commodities and HSBC Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor Commodities position performs unexpectedly, HSBC Emerging 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 HSBC Emerging will offset losses from the drop in HSBC Emerging's long position.| Lyxor Commodities vs. Lyxor MSCI Brazil | Lyxor Commodities vs. Multi Units France | Lyxor Commodities vs. Lyxor UCITS Stoxx | Lyxor Commodities vs. Multi Units France |
| HSBC Emerging vs. Multi Units France | HSBC Emerging vs. Lyxor MSCI China | HSBC Emerging vs. Lyxor Commodities RefinitivCoreCommodity | HSBC Emerging vs. Manitou BF SA |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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