Correlation Between Gold Bullion and Lyxor 10Y
Can any of the company-specific risk be diversified away by investing in both Gold Bullion 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 Gold Bullion and Lyxor 10Y 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 10Y Treasury, you can compare the effects of market volatilities on Gold Bullion 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 Gold Bullion with a short position of Lyxor 10Y. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Bullion and Lyxor 10Y.
Diversification Opportunities for Gold Bullion and Lyxor 10Y
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gold and Lyxor is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Gold Bullion Securities 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 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 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 Gold Bullion i.e., Gold Bullion and Lyxor 10Y go up and down completely randomly.
Pair Corralation between Gold Bullion and Lyxor 10Y
Assuming the 90 days trading horizon Gold Bullion Securities is expected to generate 0.72 times more return on investment than Lyxor 10Y. However, Gold Bullion Securities is 1.39 times less risky than Lyxor 10Y. It trades about 0.1 of its potential returns per unit of risk. Lyxor 10Y Treasury is currently generating about 0.04 per unit of risk. If you would invest 15,817 in Gold Bullion Securities on September 16, 2024 and sell it today you would earn a total of 7,480 from holding Gold Bullion Securities or generate 47.29% 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 10Y Treasury
Performance |
| Timeline |
| Gold Bullion Securities |
| Lyxor 10Y Treasury |
Gold Bullion and Lyxor 10Y Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Bullion and Lyxor 10Y
The main advantage of trading using opposite Gold Bullion and Lyxor 10Y positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Bullion 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.| Gold Bullion vs. Lyxor UCITS Japan | Gold Bullion vs. Lyxor UCITS Japan | Gold Bullion vs. Lyxor UCITS Stoxx | Gold Bullion vs. Amundi CAC 40 |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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