Correlation Between Ford and Lyxor Index
Can any of the company-specific risk be diversified away by investing in both Ford and Lyxor Index 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 Index 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 Index Fund, you can compare the effects of market volatilities on Ford and Lyxor Index 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 Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Lyxor Index.
Diversification Opportunities for Ford and Lyxor Index
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Lyxor is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Lyxor Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Index Fund 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 Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Index Fund has no effect on the direction of Ford i.e., Ford and Lyxor Index go up and down completely randomly.
Pair Corralation between Ford and Lyxor Index
Taking into account the 90-day investment horizon Ford Motor is expected to generate 2.28 times more return on investment than Lyxor Index. However, Ford is 2.28 times more volatile than Lyxor Index Fund. It trades about 0.04 of its potential returns per unit of risk. Lyxor Index Fund is currently generating about -0.12 per unit of risk. If you would invest 1,122 in Ford Motor on August 28, 2024 and sell it today you would earn a total of 18.00 from holding Ford Motor or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ford Motor vs. Lyxor Index Fund
Performance |
| Timeline |
| Ford Motor |
| Lyxor Index Fund |
Ford and Lyxor Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Lyxor Index
The main advantage of trading using opposite Ford and Lyxor Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Lyxor Index 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 Index will offset losses from the drop in Lyxor Index's long position.The idea behind Ford Motor and Lyxor Index Fund 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.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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Commodity Directory Find actively traded commodities issued by global exchanges |