Correlation Between Lyxor 1 and Hormel Foods
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Hormel Foods 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 Hormel Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and Hormel Foods, you can compare the effects of market volatilities on Lyxor 1 and Hormel Foods 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 Hormel Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Hormel Foods.
Diversification Opportunities for Lyxor 1 and Hormel Foods
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lyxor and Hormel is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Hormel Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hormel Foods 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 Hormel Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hormel Foods has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Hormel Foods go up and down completely randomly.
Pair Corralation between Lyxor 1 and Hormel Foods
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.57 times more return on investment than Hormel Foods. However, Lyxor 1 is 1.77 times less risky than Hormel Foods. It trades about 0.04 of its potential returns per unit of risk. Hormel Foods is currently generating about -0.01 per unit of risk. If you would invest 2,300 in Lyxor 1 on September 12, 2024 and sell it today you would earn a total of 271.00 from holding Lyxor 1 or generate 11.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor 1 vs. Hormel Foods
Performance |
| Timeline |
| Lyxor 1 |
| Hormel Foods |
Lyxor 1 and Hormel Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and Hormel Foods
The main advantage of trading using opposite Lyxor 1 and Hormel Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Hormel Foods 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 Hormel Foods will offset losses from the drop in Hormel Foods' 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 |
| Hormel Foods vs. Shenandoah Telecommunications | Hormel Foods vs. Iridium Communications | Hormel Foods vs. Ribbon Communications | Hormel Foods vs. Citic Telecom International |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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