Correlation Between Lyxor 1 and Kubota
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Kubota 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 Kubota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and Kubota, you can compare the effects of market volatilities on Lyxor 1 and Kubota 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 Kubota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Kubota.
Diversification Opportunities for Lyxor 1 and Kubota
Very good diversification
The 3 months correlation between Lyxor and Kubota is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Kubota in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kubota 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 Kubota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kubota has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Kubota go up and down completely randomly.
Pair Corralation between Lyxor 1 and Kubota
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.5 times more return on investment than Kubota. However, Lyxor 1 is 1.99 times less risky than Kubota. It trades about 0.03 of its potential returns per unit of risk. Kubota is currently generating about -0.09 per unit of risk. If you would invest 2,423 in Lyxor 1 on September 3, 2024 and sell it today you would earn a total of 76.00 from holding Lyxor 1 or generate 3.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor 1 vs. Kubota
Performance |
| Timeline |
| Lyxor 1 |
| Kubota |
Lyxor 1 and Kubota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and Kubota
The main advantage of trading using opposite Lyxor 1 and Kubota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Kubota 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 Kubota will offset losses from the drop in Kubota'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 |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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