Correlation Between Lyxor 1 and LG DAX
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and LG DAX 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 LG DAX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and LG DAX Daily, you can compare the effects of market volatilities on Lyxor 1 and LG DAX 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 LG DAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and LG DAX.
Diversification Opportunities for Lyxor 1 and LG DAX
Pay attention - limited upside
The 3 months correlation between Lyxor and DES2 is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and LG DAX Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG DAX Daily 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 LG DAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG DAX Daily has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and LG DAX go up and down completely randomly.
Pair Corralation between Lyxor 1 and LG DAX
Assuming the 90 days trading horizon Lyxor 1 is expected to under-perform the LG DAX. But the etf apears to be less risky and, when comparing its historical volatility, Lyxor 1 is 1.67 times less risky than LG DAX. The etf trades about -0.07 of its potential returns per unit of risk. The LG DAX Daily is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 97.00 in LG DAX Daily on August 27, 2024 and sell it today you would earn a total of 3.00 from holding LG DAX Daily or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor 1 vs. LG DAX Daily
Performance |
| Timeline |
| Lyxor 1 |
| LG DAX Daily |
Lyxor 1 and LG DAX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and LG DAX
The main advantage of trading using opposite Lyxor 1 and LG DAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, LG DAX 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 LG DAX will offset losses from the drop in LG DAX'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 |
| LG DAX vs. LG DAX Daily | LG DAX vs. iShares Govt Bond | LG DAX vs. Amundi MSCI Europe | LG DAX vs. iShares Global AAA AA |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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