Correlation Between Dow Jones and Lyxor Ibex
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Lyxor Ibex 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 Dow Jones and Lyxor Ibex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Lyxor Ibex 35, you can compare the effects of market volatilities on Dow Jones and Lyxor Ibex 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 Dow Jones with a short position of Lyxor Ibex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Lyxor Ibex.
Diversification Opportunities for Dow Jones and Lyxor Ibex
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Lyxor is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Lyxor Ibex 35 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Ibex 35 and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Lyxor Ibex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Ibex 35 has no effect on the direction of Dow Jones i.e., Dow Jones and Lyxor Ibex go up and down completely randomly.
Pair Corralation between Dow Jones and Lyxor Ibex
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.44 times more return on investment than Lyxor Ibex. However, Dow Jones Industrial is 2.26 times less risky than Lyxor Ibex. It trades about 0.16 of its potential returns per unit of risk. Lyxor Ibex 35 is currently generating about 0.03 per unit of risk. If you would invest 3,880,733 in Dow Jones Industrial on September 3, 2024 and sell it today you would earn a total of 610,332 from holding Dow Jones Industrial or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.9% |
| Values | Daily Returns |
Dow Jones Industrial vs. Lyxor Ibex 35
Performance |
| Timeline |
Dow Jones and Lyxor Ibex Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Lyxor Ibex 35
Pair trading matchups for Lyxor Ibex
Pair Trading with Dow Jones and Lyxor Ibex
The main advantage of trading using opposite Dow Jones and Lyxor Ibex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Lyxor Ibex 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 Ibex will offset losses from the drop in Lyxor Ibex's long position.| Dow Jones vs. Eastern Co | Dow Jones vs. Uber Technologies | Dow Jones vs. AKITA Drilling | Dow Jones vs. Chemours Co |
| Lyxor Ibex vs. Lyxor UCITS Ibex35 | Lyxor Ibex vs. Lyxor Ibex 35 | Lyxor Ibex vs. Metrovacesa SA | Lyxor Ibex vs. Endurance Motive 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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