Correlation Between Lyxor 10Y and WisdomTree Natural
Can any of the company-specific risk be diversified away by investing in both Lyxor 10Y and WisdomTree Natural 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 Lyxor 10Y and WisdomTree Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 10Y Inflation and WisdomTree Natural Gas, you can compare the effects of market volatilities on Lyxor 10Y and WisdomTree Natural 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 Lyxor 10Y with a short position of WisdomTree Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 10Y and WisdomTree Natural.
Diversification Opportunities for Lyxor 10Y and WisdomTree Natural
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lyxor and WisdomTree is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 10Y Inflation and WisdomTree Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Natural Gas and Lyxor 10Y 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 Lyxor 10Y Inflation are associated (or correlated) with WisdomTree Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Natural Gas has no effect on the direction of Lyxor 10Y i.e., Lyxor 10Y and WisdomTree Natural go up and down completely randomly.
Pair Corralation between Lyxor 10Y and WisdomTree Natural
Assuming the 90 days trading horizon Lyxor 10Y Inflation is expected to generate 0.02 times more return on investment than WisdomTree Natural. However, Lyxor 10Y Inflation is 44.31 times less risky than WisdomTree Natural. It trades about -0.06 of its potential returns per unit of risk. WisdomTree Natural Gas is currently generating about -0.12 per unit of risk. If you would invest 13,088 in Lyxor 10Y Inflation on September 2, 2024 and sell it today you would lose (48.00) from holding Lyxor 10Y Inflation or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor 10Y Inflation vs. WisdomTree Natural Gas
Performance |
| Timeline |
| Lyxor 10Y Inflation |
| WisdomTree Natural Gas |
Lyxor 10Y and WisdomTree Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 10Y and WisdomTree Natural
The main advantage of trading using opposite Lyxor 10Y and WisdomTree Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 10Y position performs unexpectedly, WisdomTree Natural 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 WisdomTree Natural will offset losses from the drop in WisdomTree Natural's long position.| Lyxor 10Y vs. WisdomTree Natural Gas | Lyxor 10Y vs. WisdomTree Natural Gas | Lyxor 10Y vs. Leverage Shares 2x | Lyxor 10Y vs. WisdomTree Silver 3x |
| WisdomTree Natural vs. GraniteShares 3x Short | WisdomTree Natural vs. WisdomTree Natural Gas | WisdomTree Natural vs. Leverage Shares 3x | WisdomTree Natural vs. WisdomTree SP 500 |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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