Correlation Between Lyxor 1 and BGF Euro
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and BGF Euro 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 BGF Euro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and BGF Euro Markets, you can compare the effects of market volatilities on Lyxor 1 and BGF Euro 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 BGF Euro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and BGF Euro.
Diversification Opportunities for Lyxor 1 and BGF Euro
Poor diversification
The 3 months correlation between Lyxor and BGF is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and BGF Euro Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Euro Markets 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 BGF Euro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Euro Markets has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and BGF Euro go up and down completely randomly.
Pair Corralation between Lyxor 1 and BGF Euro
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.92 times more return on investment than BGF Euro. However, Lyxor 1 is 1.09 times less risky than BGF Euro. It trades about 0.02 of its potential returns per unit of risk. BGF Euro Markets is currently generating about 0.01 per unit of risk. If you would invest 2,331 in Lyxor 1 on September 3, 2024 and sell it today you would earn a total of 168.00 from holding Lyxor 1 or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 40.2% |
| Values | Daily Returns |
Lyxor 1 vs. BGF Euro Markets
Performance |
| Timeline |
| Lyxor 1 |
| BGF Euro Markets |
Lyxor 1 and BGF Euro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and BGF Euro
The main advantage of trading using opposite Lyxor 1 and BGF Euro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, BGF Euro 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 BGF Euro will offset losses from the drop in BGF Euro'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 |
| BGF Euro vs. Groupama Entreprises N | BGF Euro vs. Renaissance Europe C | BGF Euro vs. Superior Plus Corp | BGF Euro 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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