Correlation Between Ford and Lyxor CAC
Can any of the company-specific risk be diversified away by investing in both Ford and Lyxor CAC 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 Ford and Lyxor CAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Lyxor CAC 40, you can compare the effects of market volatilities on Ford and Lyxor CAC 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 Ford with a short position of Lyxor CAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Lyxor CAC.
Diversification Opportunities for Ford and Lyxor CAC
Very good diversification
The 3 months correlation between Ford and Lyxor is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Lyxor CAC 40 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor CAC 40 and Ford 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 Ford Motor are associated (or correlated) with Lyxor CAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor CAC 40 has no effect on the direction of Ford i.e., Ford and Lyxor CAC go up and down completely randomly.
Pair Corralation between Ford and Lyxor CAC
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.18 times more return on investment than Lyxor CAC. However, Ford is 2.18 times more volatile than Lyxor CAC 40. It trades about 0.18 of its potential returns per unit of risk. Lyxor CAC 40 is currently generating about -0.21 per unit of risk. If you would invest 1,027 in Ford Motor on August 30, 2024 and sell it today you would earn a total of 83.00 from holding Ford Motor or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Lyxor CAC 40
Performance |
| Timeline |
| Ford Motor |
| Lyxor CAC 40 |
Ford and Lyxor CAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Lyxor CAC
The main advantage of trading using opposite Ford and Lyxor CAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Lyxor CAC 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 Lyxor CAC will offset losses from the drop in Lyxor CAC's long position.The idea behind Ford Motor and Lyxor CAC 40 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lyxor CAC vs. Manitou BF SA | Lyxor CAC vs. Ossiam Minimum Variance | Lyxor CAC vs. Ekinops SA | Lyxor CAC vs. Orapi SA |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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