Correlation Between Lyxor 1 and Central Japan
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Central Japan 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 Central Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and Central Japan Railway, you can compare the effects of market volatilities on Lyxor 1 and Central Japan 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 Central Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Central Japan.
Diversification Opportunities for Lyxor 1 and Central Japan
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lyxor and Central is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Central Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Japan Railway 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 Central Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Japan Railway has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Central Japan go up and down completely randomly.
Pair Corralation between Lyxor 1 and Central Japan
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 14.12 times less return on investment than Central Japan. But when comparing it to its historical volatility, Lyxor 1 is 6.48 times less risky than Central Japan. It trades about 0.02 of its potential returns per unit of risk. Central Japan Railway is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 927.00 in Central Japan Railway on September 3, 2024 and sell it today you would earn a total of 1,038 from holding Central Japan Railway or generate 111.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor 1 vs. Central Japan Railway
Performance |
| Timeline |
| Lyxor 1 |
| Central Japan Railway |
Lyxor 1 and Central Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and Central Japan
The main advantage of trading using opposite Lyxor 1 and Central Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Central Japan 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 Central Japan will offset losses from the drop in Central Japan'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 |
| Central Japan vs. Superior Plus Corp | Central Japan vs. NMI Holdings | Central Japan vs. Origin Agritech | Central Japan vs. SIVERS SEMICONDUCTORS AB |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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