Correlation Between IShares Core and Lyxor Euro
Can any of the company-specific risk be diversified away by investing in both IShares Core and Lyxor Euro 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 Core and Lyxor Euro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and Lyxor Euro Government, you can compare the effects of market volatilities on IShares Core and Lyxor Euro 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 Core with a short position of Lyxor Euro. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Lyxor Euro.
Diversification Opportunities for IShares Core and Lyxor Euro
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Lyxor is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Lyxor Euro Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Euro Government and IShares Core 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 Core SP are associated (or correlated) with Lyxor Euro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Euro Government has no effect on the direction of IShares Core i.e., IShares Core and Lyxor Euro go up and down completely randomly.
Pair Corralation between IShares Core and Lyxor Euro
Assuming the 90 days trading horizon iShares Core SP is expected to under-perform the Lyxor Euro. In addition to that, IShares Core is 5.53 times more volatile than Lyxor Euro Government. It trades about -0.12 of its total potential returns per unit of risk. Lyxor Euro Government is currently generating about -0.07 per unit of volatility. If you would invest 703.00 in Lyxor Euro Government on January 19, 2025 and sell it today you would lose (5.00) from holding Lyxor Euro Government or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core SP vs. Lyxor Euro Government
Performance |
| Timeline |
| iShares Core SP |
| Lyxor Euro Government |
IShares Core and Lyxor Euro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Lyxor Euro
The main advantage of trading using opposite IShares Core and Lyxor Euro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Lyxor Euro 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 Euro will offset losses from the drop in Lyxor Euro's long position.| IShares Core vs. iShares Corp Bond | IShares Core vs. iShares Emerging Asia | IShares Core vs. iShares MSCI Global | IShares Core vs. iShares VII PLC |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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