Correlation Between Lyxor 1 and Orange SA
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Orange SA 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 Orange SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and Orange SA, you can compare the effects of market volatilities on Lyxor 1 and Orange SA 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 Orange SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Orange SA.
Diversification Opportunities for Lyxor 1 and Orange SA
Excellent diversification
The 3 months correlation between Lyxor and Orange is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Orange SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA 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 Orange SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange SA has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Orange SA go up and down completely randomly.
Pair Corralation between Lyxor 1 and Orange SA
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 1.04 times more return on investment than Orange SA. However, Lyxor 1 is 1.04 times more volatile than Orange SA. It trades about 0.01 of its potential returns per unit of risk. Orange SA is currently generating about 0.0 per unit of risk. If you would invest 2,447 in Lyxor 1 on August 27, 2024 and sell it today you would earn a total of 9.00 from holding Lyxor 1 or generate 0.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.42% |
| Values | Daily Returns |
Lyxor 1 vs. Orange SA
Performance |
| Timeline |
| Lyxor 1 |
| Orange SA |
Lyxor 1 and Orange SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and Orange SA
The main advantage of trading using opposite Lyxor 1 and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Orange SA 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 Orange SA will offset losses from the drop in Orange SA'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 |
| Orange SA vs. Liberty Broadband | Orange SA vs. Chunghwa Telecom Co | Orange SA vs. China Communications Services | Orange SA vs. Texas Roadhouse |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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