Correlation Between Lyxor 1 and TDK
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and TDK 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 TDK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and TDK Corporation, you can compare the effects of market volatilities on Lyxor 1 and TDK 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 TDK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and TDK.
Diversification Opportunities for Lyxor 1 and TDK
Very good diversification
The 3 months correlation between Lyxor and TDK is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and TDK Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDK Corporation 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 TDK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDK Corporation has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and TDK go up and down completely randomly.
Pair Corralation between Lyxor 1 and TDK
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 3.84 times less return on investment than TDK. But when comparing it to its historical volatility, Lyxor 1 is 6.31 times less risky than TDK. It trades about 0.18 of its potential returns per unit of risk. TDK Corporation is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,010 in TDK Corporation on September 2, 2024 and sell it today you would earn a total of 100.00 from holding TDK Corporation or generate 9.9% 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. TDK Corp.
Performance |
| Timeline |
| Lyxor 1 |
| TDK Corporation |
Lyxor 1 and TDK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and TDK
The main advantage of trading using opposite Lyxor 1 and TDK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, TDK 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 TDK will offset losses from the drop in TDK'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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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