Correlation Between Lyxor UCITS and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Lyxor UCITS and BNP Paribas 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 UCITS and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor UCITS Dow and BNP Paribas Easy, you can compare the effects of market volatilities on Lyxor UCITS and BNP Paribas 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 UCITS with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor UCITS and BNP Paribas.
Diversification Opportunities for Lyxor UCITS and BNP Paribas
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lyxor and BNP is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor UCITS Dow and BNP Paribas Easy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Easy and Lyxor UCITS 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 UCITS Dow are associated (or correlated) with BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas Easy has no effect on the direction of Lyxor UCITS i.e., Lyxor UCITS and BNP Paribas go up and down completely randomly.
Pair Corralation between Lyxor UCITS and BNP Paribas
Assuming the 90 days trading horizon Lyxor UCITS Dow is expected to generate 1.48 times more return on investment than BNP Paribas. However, Lyxor UCITS is 1.48 times more volatile than BNP Paribas Easy. It trades about 0.26 of its potential returns per unit of risk. BNP Paribas Easy is currently generating about 0.19 per unit of risk. If you would invest 38,660 in Lyxor UCITS Dow on September 3, 2024 and sell it today you would earn a total of 4,660 from holding Lyxor UCITS Dow or generate 12.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor UCITS Dow vs. BNP Paribas Easy
Performance |
| Timeline |
| Lyxor UCITS Dow |
| BNP Paribas Easy |
Lyxor UCITS and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor UCITS and BNP Paribas
The main advantage of trading using opposite Lyxor UCITS and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor UCITS position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' long position.| Lyxor UCITS vs. Multi Units Luxembourg | Lyxor UCITS vs. Lyxor UCITS Stoxx | Lyxor UCITS vs. Lyxor MSCI China | Lyxor UCITS vs. Multi Units Luxembourg |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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