Correlation Between Lyxor 1 and New Residential
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and New Residential 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 New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and New Residential Investment, you can compare the effects of market volatilities on Lyxor 1 and New Residential 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 New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and New Residential.
Diversification Opportunities for Lyxor 1 and New Residential
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lyxor and New is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and New Residential go up and down completely randomly.
Pair Corralation between Lyxor 1 and New Residential
Assuming the 90 days trading horizon Lyxor 1 is expected to under-perform the New Residential. But the etf apears to be less risky and, when comparing its historical volatility, Lyxor 1 is 1.26 times less risky than New Residential. The etf trades about -0.06 of its potential returns per unit of risk. The New Residential Investment is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 965.00 in New Residential Investment on August 29, 2024 and sell it today you would earn a total of 87.00 from holding New Residential Investment or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor 1 vs. New Residential Investment
Performance |
| Timeline |
| Lyxor 1 |
| New Residential Inve |
Lyxor 1 and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and New Residential
The main advantage of trading using opposite Lyxor 1 and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's 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 |
| New Residential vs. Xtrackers ShortDAX | New Residential vs. Xtrackers LevDAX | New Residential vs. Lyxor 1 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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