Correlation Between Lyxor 1 and Cigna
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Cigna 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 Cigna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and Cigna, you can compare the effects of market volatilities on Lyxor 1 and Cigna 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 Cigna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Cigna.
Diversification Opportunities for Lyxor 1 and Cigna
Very good diversification
The 3 months correlation between Lyxor and Cigna is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Cigna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigna 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 Cigna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cigna has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Cigna go up and down completely randomly.
Pair Corralation between Lyxor 1 and Cigna
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 1.05 times less return on investment than Cigna. But when comparing it to its historical volatility, Lyxor 1 is 3.8 times less risky than Cigna. It trades about 0.47 of its potential returns per unit of risk. Cigna is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 27,210 in Cigna on November 6, 2024 and sell it today you would earn a total of 1,900 from holding Cigna or generate 6.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Lyxor 1 vs. Cigna
Performance |
| Timeline |
| Lyxor 1 |
| Cigna |
Lyxor 1 and Cigna Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and Cigna
The main advantage of trading using opposite Lyxor 1 and Cigna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Cigna 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 Cigna will offset losses from the drop in Cigna's 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 |
| Cigna vs. BOSTON BEER A | Cigna vs. Molson Coors Beverage | Cigna vs. China BlueChemical | Cigna vs. Mitsui Chemicals |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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