Correlation Between IShares VII and Lyxor Japan
Can any of the company-specific risk be diversified away by investing in both IShares VII and Lyxor Japan 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 IShares VII and Lyxor Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares VII PLC and Lyxor Japan UCITS, you can compare the effects of market volatilities on IShares VII and Lyxor Japan 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 IShares VII with a short position of Lyxor Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and Lyxor Japan.
Diversification Opportunities for IShares VII and Lyxor Japan
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Lyxor is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII PLC and Lyxor Japan UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Japan UCITS and IShares VII 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 iShares VII PLC are associated (or correlated) with Lyxor Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Japan UCITS has no effect on the direction of IShares VII i.e., IShares VII and Lyxor Japan go up and down completely randomly.
Pair Corralation between IShares VII and Lyxor Japan
Assuming the 90 days trading horizon iShares VII PLC is expected to generate 1.13 times more return on investment than Lyxor Japan. However, IShares VII is 1.13 times more volatile than Lyxor Japan UCITS. It trades about 0.06 of its potential returns per unit of risk. Lyxor Japan UCITS is currently generating about 0.04 per unit of risk. If you would invest 3,070,000 in iShares VII PLC on September 19, 2024 and sell it today you would earn a total of 886,500 from holding iShares VII PLC or generate 28.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares VII PLC vs. Lyxor Japan UCITS
Performance |
| Timeline |
| iShares VII PLC |
| Lyxor Japan UCITS |
IShares VII and Lyxor Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares VII and Lyxor Japan
The main advantage of trading using opposite IShares VII and Lyxor Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares VII position performs unexpectedly, Lyxor Japan 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 Japan will offset losses from the drop in Lyxor Japan's long position.| IShares VII vs. iShares Corp Bond | IShares VII vs. iShares Emerging Asia | IShares VII vs. iShares MSCI Global | IShares VII vs. iShares VII PLC |
| Lyxor Japan vs. UBSFund Solutions MSCI | Lyxor Japan vs. Vanguard SP 500 | Lyxor Japan vs. iShares VII PLC | Lyxor Japan vs. iShares Core SP |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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