Correlation Between Lyxor 1 and Yancoal Australia
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Yancoal Australia 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 Yancoal Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and Yancoal Australia, you can compare the effects of market volatilities on Lyxor 1 and Yancoal Australia 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 Yancoal Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Yancoal Australia.
Diversification Opportunities for Lyxor 1 and Yancoal Australia
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lyxor and Yancoal is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Yancoal Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yancoal Australia 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 Yancoal Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yancoal Australia has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Yancoal Australia go up and down completely randomly.
Pair Corralation between Lyxor 1 and Yancoal Australia
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 5.3 times less return on investment than Yancoal Australia. But when comparing it to its historical volatility, Lyxor 1 is 3.55 times less risky than Yancoal Australia. It trades about 0.06 of its potential returns per unit of risk. Yancoal Australia is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 328.00 in Yancoal Australia on September 3, 2024 and sell it today you would earn a total of 58.00 from holding Yancoal Australia or generate 17.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor 1 vs. Yancoal Australia
Performance |
| Timeline |
| Lyxor 1 |
| Yancoal Australia |
Lyxor 1 and Yancoal Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 1 and Yancoal Australia
The main advantage of trading using opposite Lyxor 1 and Yancoal Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Yancoal Australia 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 Yancoal Australia will offset losses from the drop in Yancoal Australia'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 |
| Yancoal Australia vs. STORE ELECTRONIC | Yancoal Australia vs. American Public Education | Yancoal Australia vs. EMBARK EDUCATION LTD | Yancoal Australia vs. DEVRY EDUCATION GRP |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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