Correlation Between Lyxor 1 and ELECOM CO
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and ELECOM CO 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 ELECOM CO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and ELECOM LTD, you can compare the effects of market volatilities on Lyxor 1 and ELECOM CO 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 ELECOM CO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and ELECOM CO.
Diversification Opportunities for Lyxor 1 and ELECOM CO
Very good diversification
The 3 months correlation between Lyxor and ELECOM is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and ELECOM LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELECOM LTD 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 ELECOM CO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELECOM LTD has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and ELECOM CO go up and down completely randomly.
Pair Corralation between Lyxor 1 and ELECOM CO
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 1.19 times less return on investment than ELECOM CO. But when comparing it to its historical volatility, Lyxor 1 is 1.39 times less risky than ELECOM CO. It trades about 0.17 of its potential returns per unit of risk. ELECOM LTD is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 850.00 in ELECOM LTD on September 1, 2024 and sell it today you would earn a total of 30.00 from holding ELECOM LTD or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lyxor 1 vs. ELECOM LTD
Performance |
| Timeline |
| Lyxor 1 |
| ELECOM LTD |
Lyxor 1 and ELECOM CO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and ELECOM CO
The main advantage of trading using opposite Lyxor 1 and ELECOM CO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, ELECOM CO 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 ELECOM CO will offset losses from the drop in ELECOM CO'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 |
| ELECOM CO vs. SEIKO EPSON PADR | ELECOM CO vs. Superior Plus Corp | ELECOM CO vs. NMI Holdings | ELECOM CO vs. Origin Agritech |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |