Correlation Between IShares China and Lyxor UCITS
Can any of the company-specific risk be diversified away by investing in both IShares China and Lyxor UCITS 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 China and Lyxor UCITS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares China CNY and Lyxor UCITS Japan, you can compare the effects of market volatilities on IShares China and Lyxor UCITS 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 China with a short position of Lyxor UCITS. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares China and Lyxor UCITS.
Diversification Opportunities for IShares China and Lyxor UCITS
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Lyxor is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares China CNY and Lyxor UCITS Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor UCITS Japan and IShares China 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 China CNY are associated (or correlated) with Lyxor UCITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor UCITS Japan has no effect on the direction of IShares China i.e., IShares China and Lyxor UCITS go up and down completely randomly.
Pair Corralation between IShares China and Lyxor UCITS
Assuming the 90 days trading horizon IShares China is expected to generate 1.01 times less return on investment than Lyxor UCITS. But when comparing it to its historical volatility, iShares China CNY is 3.61 times less risky than Lyxor UCITS. It trades about 0.12 of its potential returns per unit of risk. Lyxor UCITS Japan is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 15,620 in Lyxor UCITS Japan on September 20, 2024 and sell it today you would earn a total of 850.00 from holding Lyxor UCITS Japan or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares China CNY vs. Lyxor UCITS Japan
Performance |
| Timeline |
| iShares China CNY |
| Lyxor UCITS Japan |
IShares China and Lyxor UCITS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares China and Lyxor UCITS
The main advantage of trading using opposite IShares China and Lyxor UCITS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares China position performs unexpectedly, Lyxor UCITS 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 UCITS will offset losses from the drop in Lyxor UCITS's long position.| IShares China vs. Lyxor UCITS Japan | IShares China vs. Lyxor UCITS Japan | IShares China vs. Lyxor UCITS Stoxx | IShares China vs. Amundi CAC 40 |
| Lyxor UCITS vs. Lyxor UCITS Japan | Lyxor UCITS vs. Lyxor UCITS Stoxx | Lyxor UCITS vs. Gold Bullion Securities | Lyxor UCITS vs. SSgA SPDR ETFs |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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