Correlation Between GM and Lyxor UCITS
Can any of the company-specific risk be diversified away by investing in both GM and Lyxor UCITS 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 GM and Lyxor UCITS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Lyxor UCITS Daily, you can compare the effects of market volatilities on GM and Lyxor UCITS 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 GM with a short position of Lyxor UCITS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Lyxor UCITS.
Diversification Opportunities for GM and Lyxor UCITS
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GM and Lyxor is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Lyxor UCITS Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor UCITS Daily and GM 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 General Motors are associated (or correlated) with Lyxor UCITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor UCITS Daily has no effect on the direction of GM i.e., GM and Lyxor UCITS go up and down completely randomly.
Pair Corralation between GM and Lyxor UCITS
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Lyxor UCITS. In addition to that, GM is 3.93 times more volatile than Lyxor UCITS Daily. It trades about -0.11 of its total potential returns per unit of risk. Lyxor UCITS Daily is currently generating about -0.18 per unit of volatility. If you would invest 1,794 in Lyxor UCITS Daily on September 17, 2024 and sell it today you would lose (47.00) from holding Lyxor UCITS Daily or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
General Motors vs. Lyxor UCITS Daily
Performance |
| Timeline |
| General Motors |
| Lyxor UCITS Daily |
GM and Lyxor UCITS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Lyxor UCITS
The main advantage of trading using opposite GM and Lyxor UCITS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Lyxor UCITS 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 UCITS will offset losses from the drop in Lyxor UCITS's long position.The idea behind General Motors and Lyxor UCITS Daily 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 UCITS vs. Lyxor UCITS Japan | Lyxor UCITS vs. Lyxor UCITS Japan | Lyxor UCITS vs. Lyxor UCITS Stoxx | Lyxor UCITS 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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