Correlation Between Lyxor 1 and Carbios
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Carbios 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 Carbios into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and Carbios, you can compare the effects of market volatilities on Lyxor 1 and Carbios 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 Carbios. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Carbios.
Diversification Opportunities for Lyxor 1 and Carbios
Excellent diversification
The 3 months correlation between Lyxor and Carbios is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Carbios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios 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 Carbios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbios has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Carbios go up and down completely randomly.
Pair Corralation between Lyxor 1 and Carbios
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.25 times more return on investment than Carbios. However, Lyxor 1 is 3.95 times less risky than Carbios. It trades about 0.04 of its potential returns per unit of risk. Carbios is currently generating about -0.06 per unit of risk. If you would invest 2,202 in Lyxor 1 on September 13, 2024 and sell it today you would earn a total of 384.00 from holding Lyxor 1 or generate 17.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lyxor 1 vs. Carbios
Performance |
| Timeline |
| Lyxor 1 |
| Carbios |
Lyxor 1 and Carbios Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and Carbios
The main advantage of trading using opposite Lyxor 1 and Carbios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Carbios 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 Carbios will offset losses from the drop in Carbios' long position.| Lyxor 1 vs. Lyxor Fed Funds | Lyxor 1 vs. Lyxor BofAML USD | Lyxor 1 vs. Lyxor Index Fund | Lyxor 1 vs. Lyxor 1 TecDAX |
| Carbios vs. Geely Automobile Holdings | Carbios vs. National Beverage Corp | Carbios vs. Motorcar Parts of | Carbios vs. Lery Seafood Group |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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