Correlation Between Lyxor 1 and Vista Outdoor

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Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Vista Outdoor 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 Vista Outdoor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and Vista Outdoor, you can compare the effects of market volatilities on Lyxor 1 and Vista Outdoor 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 Vista Outdoor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Vista Outdoor.

Diversification Opportunities for Lyxor 1 and Vista Outdoor

LyxorVistaDiversified AwayLyxorVistaDiversified Away100%
-0.05
  Correlation Coefficient

Good diversification

The 3 months correlation between Lyxor and Vista is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Vista Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Outdoor 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 Vista Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Outdoor has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Vista Outdoor go up and down completely randomly.

Pair Corralation between Lyxor 1 and Vista Outdoor

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 5.36 times more return on investment than Vista Outdoor. However, Lyxor 1 is 5.36 times more volatile than Vista Outdoor. It trades about 0.08 of its potential returns per unit of risk. Vista Outdoor is currently generating about 0.26 per unit of risk. If you would invest  2,456  in Lyxor 1 on September 23, 2024 and sell it today you would earn a total of  29.00  from holding Lyxor 1 or generate 1.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy22.73%
ValuesDaily Returns

Lyxor 1   vs.  Vista Outdoor

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -5051015
JavaScript chart by amCharts 3.21.15E908 5VO
       Timeline  
Lyxor 1 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Lyxor 1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2424.52525.526
Vista Outdoor 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Vista Outdoor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Lyxor 1 and Vista Outdoor Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.62-1.96-1.3-0.650.0110.681.372.062.75 0.10.20.30.40.5
JavaScript chart by amCharts 3.21.15E908 5VO
       Returns  

Pair Trading with Lyxor 1 and Vista Outdoor

The main advantage of trading using opposite Lyxor 1 and Vista Outdoor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Vista Outdoor 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 Vista Outdoor will offset losses from the drop in Vista Outdoor's long position.
The idea behind Lyxor 1 and Vista Outdoor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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