Correlation Between Gold Bullion and Lyxor MSCI
Can any of the company-specific risk be diversified away by investing in both Gold Bullion and Lyxor MSCI 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 Gold Bullion and Lyxor MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Bullion Securities and Lyxor MSCI China, you can compare the effects of market volatilities on Gold Bullion and Lyxor MSCI 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 Gold Bullion with a short position of Lyxor MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Bullion and Lyxor MSCI.
Diversification Opportunities for Gold Bullion and Lyxor MSCI
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gold and Lyxor is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Gold Bullion Securities and Lyxor MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor MSCI China and Gold Bullion 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 Gold Bullion Securities are associated (or correlated) with Lyxor MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor MSCI China has no effect on the direction of Gold Bullion i.e., Gold Bullion and Lyxor MSCI go up and down completely randomly.
Pair Corralation between Gold Bullion and Lyxor MSCI
Assuming the 90 days trading horizon Gold Bullion is expected to generate 4.39 times less return on investment than Lyxor MSCI. But when comparing it to its historical volatility, Gold Bullion Securities is 2.35 times less risky than Lyxor MSCI. It trades about 0.13 of its potential returns per unit of risk. Lyxor MSCI China is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 9,478 in Lyxor MSCI China on December 1, 2024 and sell it today you would earn a total of 954.00 from holding Lyxor MSCI China or generate 10.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Bullion Securities vs. Lyxor MSCI China
Performance |
| Timeline |
| Gold Bullion Securities |
| Lyxor MSCI China |
Gold Bullion and Lyxor MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Bullion and Lyxor MSCI
The main advantage of trading using opposite Gold Bullion and Lyxor MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Bullion position performs unexpectedly, Lyxor MSCI 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 MSCI will offset losses from the drop in Lyxor MSCI's long position.| Gold Bullion vs. Amundi Index Solutions | Gold Bullion vs. Multi Units Luxembourg | Gold Bullion vs. iShares Digital Entertainment | Gold Bullion vs. Amundi Index Solutions |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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