Correlation Between Lyxor 1 and Medtronic PLC
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Medtronic PLC 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 Medtronic PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and Medtronic PLC, you can compare the effects of market volatilities on Lyxor 1 and Medtronic PLC 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 Medtronic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Medtronic PLC.
Diversification Opportunities for Lyxor 1 and Medtronic PLC
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lyxor and Medtronic is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Medtronic PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medtronic PLC 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 Medtronic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medtronic PLC has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Medtronic PLC go up and down completely randomly.
Pair Corralation between Lyxor 1 and Medtronic PLC
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 1.76 times less return on investment than Medtronic PLC. But when comparing it to its historical volatility, Lyxor 1 is 1.27 times less risky than Medtronic PLC. It trades about 0.06 of its potential returns per unit of risk. Medtronic PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,547 in Medtronic PLC on September 1, 2024 and sell it today you would earn a total of 1,635 from holding Medtronic PLC or generate 24.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.64% |
| Values | Daily Returns |
Lyxor 1 vs. Medtronic PLC
Performance |
| Timeline |
| Lyxor 1 |
| Medtronic PLC |
Lyxor 1 and Medtronic PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and Medtronic PLC
The main advantage of trading using opposite Lyxor 1 and Medtronic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Medtronic PLC 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 Medtronic PLC will offset losses from the drop in Medtronic PLC'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 |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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