Correlation Between GM and Lyxor Index
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Lyxor Index 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 Index Fund, you can compare the effects of market volatilities on GM 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 GM with a short position of Lyxor Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Lyxor Index.
Diversification Opportunities for GM and Lyxor Index
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GM and Lyxor is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 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 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 GM i.e., GM and Lyxor Index go up and down completely randomly.
Pair Corralation between GM and Lyxor Index
Allowing for the 90-day total investment horizon General Motors is expected to generate 2.31 times more return on investment than Lyxor Index. However, GM is 2.31 times more volatile than Lyxor Index Fund. It trades about 0.11 of its potential returns per unit of risk. Lyxor Index Fund is currently generating about 0.03 per unit of risk. If you would invest 3,331 in General Motors on September 4, 2024 and sell it today you would earn a total of 2,035 from holding General Motors or generate 61.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
General Motors vs. Lyxor Index Fund
Performance |
| Timeline |
| General Motors |
| Lyxor Index Fund |
GM and Lyxor Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Lyxor Index
The main advantage of trading using opposite GM and Lyxor Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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.| Lyxor Index vs. Lyxor SP 500 | Lyxor Index vs. Lyxor UCITS Daily | Lyxor Index vs. Lyxor UCITS MSCI | Lyxor Index vs. Lyxor Treasury 10Y |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |