Correlation Between Lyxor 1 and McPhy Energy
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and McPhy Energy 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 McPhy Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and McPhy Energy SA, you can compare the effects of market volatilities on Lyxor 1 and McPhy Energy 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 McPhy Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and McPhy Energy.
Diversification Opportunities for Lyxor 1 and McPhy Energy
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lyxor and McPhy is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and McPhy Energy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McPhy Energy 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 McPhy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McPhy Energy SA has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and McPhy Energy go up and down completely randomly.
Pair Corralation between Lyxor 1 and McPhy Energy
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.23 times more return on investment than McPhy Energy. However, Lyxor 1 is 4.39 times less risky than McPhy Energy. It trades about 0.0 of its potential returns per unit of risk. McPhy Energy SA is currently generating about -0.19 per unit of risk. If you would invest 2,512 in Lyxor 1 on September 3, 2024 and sell it today you would lose (13.00) from holding Lyxor 1 or give up 0.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor 1 vs. McPhy Energy SA
Performance |
| Timeline |
| Lyxor 1 |
| McPhy Energy SA |
Lyxor 1 and McPhy Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and McPhy Energy
The main advantage of trading using opposite Lyxor 1 and McPhy Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, McPhy Energy 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 McPhy Energy will offset losses from the drop in McPhy Energy'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 |
| McPhy Energy vs. MEDICAL FACILITIES NEW | McPhy Energy vs. Computershare Limited | McPhy Energy vs. Consolidated Communications Holdings | McPhy Energy vs. INTERSHOP Communications Aktiengesellschaft |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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