Correlation Between Lyxor 1 and NIPPON PROLOGIS
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and NIPPON PROLOGIS 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 NIPPON PROLOGIS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and NIPPON PROLOGIS REIT, you can compare the effects of market volatilities on Lyxor 1 and NIPPON PROLOGIS 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 NIPPON PROLOGIS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and NIPPON PROLOGIS.
Diversification Opportunities for Lyxor 1 and NIPPON PROLOGIS
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lyxor and NIPPON is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and NIPPON PROLOGIS REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIPPON PROLOGIS REIT 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 NIPPON PROLOGIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIPPON PROLOGIS REIT has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and NIPPON PROLOGIS go up and down completely randomly.
Pair Corralation between Lyxor 1 and NIPPON PROLOGIS
Assuming the 90 days trading horizon Lyxor 1 is expected to under-perform the NIPPON PROLOGIS. But the etf apears to be less risky and, when comparing its historical volatility, Lyxor 1 is 1.4 times less risky than NIPPON PROLOGIS. The etf trades about -0.07 of its potential returns per unit of risk. The NIPPON PROLOGIS REIT is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 141,000 in NIPPON PROLOGIS REIT on August 28, 2024 and sell it today you would earn a total of 4,000 from holding NIPPON PROLOGIS REIT or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor 1 vs. NIPPON PROLOGIS REIT
Performance |
| Timeline |
| Lyxor 1 |
| NIPPON PROLOGIS REIT |
Lyxor 1 and NIPPON PROLOGIS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and NIPPON PROLOGIS
The main advantage of trading using opposite Lyxor 1 and NIPPON PROLOGIS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, NIPPON PROLOGIS 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 NIPPON PROLOGIS will offset losses from the drop in NIPPON PROLOGIS'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 |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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