Correlation Between Lyxor 1 and Restaurant Brands
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Restaurant Brands 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 1 and Restaurant Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and Restaurant Brands International, you can compare the effects of market volatilities on Lyxor 1 and Restaurant Brands 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 1 with a short position of Restaurant Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Restaurant Brands.
Diversification Opportunities for Lyxor 1 and Restaurant Brands
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lyxor and Restaurant is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Restaurant Brands Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Restaurant Brands and Lyxor 1 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 1 are associated (or correlated) with Restaurant Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Restaurant Brands has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Restaurant Brands go up and down completely randomly.
Pair Corralation between Lyxor 1 and Restaurant Brands
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 1.42 times less return on investment than Restaurant Brands. But when comparing it to its historical volatility, Lyxor 1 is 1.4 times less risky than Restaurant Brands. It trades about 0.01 of its potential returns per unit of risk. Restaurant Brands International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 6,451 in Restaurant Brands International on August 31, 2024 and sell it today you would earn a total of 179.00 from holding Restaurant Brands International or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor 1 vs. Restaurant Brands Internationa
Performance |
| Timeline |
| Lyxor 1 |
| Restaurant Brands |
Lyxor 1 and Restaurant Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and Restaurant Brands
The main advantage of trading using opposite Lyxor 1 and Restaurant Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Restaurant Brands 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 Restaurant Brands will offset losses from the drop in Restaurant Brands' long position.| Lyxor 1 vs. Lyxor Fed Funds | Lyxor 1 vs. Lyxor BofAML USD | Lyxor 1 vs. Lyxor 1 TecDAX | Lyxor 1 vs. Lyxor UCITS EuroMTS |
| Restaurant Brands vs. McDonalds | Restaurant Brands vs. Starbucks | Restaurant Brands vs. Compass Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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