Correlation Between Lyxor 1 and GMO Internet
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and GMO Internet 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 GMO Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and GMO Internet, you can compare the effects of market volatilities on Lyxor 1 and GMO Internet 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 GMO Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and GMO Internet.
Diversification Opportunities for Lyxor 1 and GMO Internet
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lyxor and GMO is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and GMO Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Internet 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 GMO Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Internet has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and GMO Internet go up and down completely randomly.
Pair Corralation between Lyxor 1 and GMO Internet
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.58 times more return on investment than GMO Internet. However, Lyxor 1 is 1.72 times less risky than GMO Internet. It trades about -0.13 of its potential returns per unit of risk. GMO Internet is currently generating about -0.19 per unit of risk. If you would invest 2,586 in Lyxor 1 on October 11, 2024 and sell it today you would lose (53.00) from holding Lyxor 1 or give up 2.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
Lyxor 1 vs. GMO Internet
Performance |
| Timeline |
| Lyxor 1 |
| GMO Internet |
Lyxor 1 and GMO Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and GMO Internet
The main advantage of trading using opposite Lyxor 1 and GMO Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, GMO Internet 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 GMO Internet will offset losses from the drop in GMO Internet'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 |
| GMO Internet vs. SIERRA METALS | GMO Internet vs. Easy Software AG | GMO Internet vs. Axway Software SA | GMO Internet vs. Forsys Metals Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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