Correlation Between Lyxor 1 and Nippon Telegraph
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Nippon Telegraph 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 Nippon Telegraph into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and Nippon Telegraph and, you can compare the effects of market volatilities on Lyxor 1 and Nippon Telegraph 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 Nippon Telegraph. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Nippon Telegraph.
Diversification Opportunities for Lyxor 1 and Nippon Telegraph
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lyxor and Nippon is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Nippon Telegraph and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Telegraph 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 Nippon Telegraph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Telegraph has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Nippon Telegraph go up and down completely randomly.
Pair Corralation between Lyxor 1 and Nippon Telegraph
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.8 times more return on investment than Nippon Telegraph. However, Lyxor 1 is 1.26 times less risky than Nippon Telegraph. It trades about 0.02 of its potential returns per unit of risk. Nippon Telegraph and is currently generating about 0.0 per unit of risk. If you would invest 2,291 in Lyxor 1 on August 28, 2024 and sell it today you would earn a total of 165.00 from holding Lyxor 1 or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Lyxor 1 vs. Nippon Telegraph and
Performance |
| Timeline |
| Lyxor 1 |
| Nippon Telegraph |
Lyxor 1 and Nippon Telegraph Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and Nippon Telegraph
The main advantage of trading using opposite Lyxor 1 and Nippon Telegraph positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Nippon Telegraph 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 Nippon Telegraph will offset losses from the drop in Nippon Telegraph'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 |
| Nippon Telegraph vs. PENN NATL GAMING | Nippon Telegraph vs. Hochschild Mining plc | Nippon Telegraph vs. Games Workshop Group | Nippon Telegraph vs. TSOGO SUN GAMING |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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