Correlation Between Ford and Lyxor 10Y
Can any of the company-specific risk be diversified away by investing in both Ford and Lyxor 10Y 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 10Y 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 10Y Treasury, you can compare the effects of market volatilities on Ford and Lyxor 10Y 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 10Y. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Lyxor 10Y.
Diversification Opportunities for Ford and Lyxor 10Y
Excellent diversification
The 3 months correlation between Ford and Lyxor is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Lyxor 10Y Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor 10Y Treasury 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 10Y. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor 10Y Treasury has no effect on the direction of Ford i.e., Ford and Lyxor 10Y go up and down completely randomly.
Pair Corralation between Ford and Lyxor 10Y
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.29 times more return on investment than Lyxor 10Y. However, Ford is 1.29 times more volatile than Lyxor 10Y Treasury. It trades about 0.19 of its potential returns per unit of risk. Lyxor 10Y Treasury is currently generating about 0.1 per unit of risk. If you would invest 974.00 in Ford Motor on October 20, 2024 and sell it today you would earn a total of 44.00 from holding Ford Motor or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Ford Motor vs. Lyxor 10Y Treasury
Performance |
| Timeline |
| Ford Motor |
| Lyxor 10Y Treasury |
Ford and Lyxor 10Y Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Lyxor 10Y
The main advantage of trading using opposite Ford and Lyxor 10Y positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Lyxor 10Y 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 10Y will offset losses from the drop in Lyxor 10Y's long position.The idea behind Ford Motor and Lyxor 10Y Treasury 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 10Y vs. Lyxor UCITS Japan | Lyxor 10Y vs. Lyxor UCITS Japan | Lyxor 10Y vs. Lyxor UCITS Stoxx | Lyxor 10Y vs. Amundi CAC 40 |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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