Correlation Between Lyxor 10Y and Multi Units
Can any of the company-specific risk be diversified away by investing in both Lyxor 10Y and Multi Units 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 Multi Units 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 Multi Units Luxembourg, you can compare the effects of market volatilities on Lyxor 10Y and Multi Units 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 Multi Units. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 10Y and Multi Units.
Diversification Opportunities for Lyxor 10Y and Multi Units
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lyxor and Multi is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 10Y Inflation and Multi Units Luxembourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units Luxembourg 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 Multi Units. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units Luxembourg has no effect on the direction of Lyxor 10Y i.e., Lyxor 10Y and Multi Units go up and down completely randomly.
Pair Corralation between Lyxor 10Y and Multi Units
Assuming the 90 days trading horizon Lyxor 10Y is expected to generate 29.26 times less return on investment than Multi Units. But when comparing it to its historical volatility, Lyxor 10Y Inflation is 2.44 times less risky than Multi Units. It trades about 0.02 of its potential returns per unit of risk. Multi Units Luxembourg is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,779,000 in Multi Units Luxembourg on August 30, 2024 and sell it today you would earn a total of 107,250 from holding Multi Units Luxembourg or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor 10Y Inflation vs. Multi Units Luxembourg
Performance |
| Timeline |
| Lyxor 10Y Inflation |
| Multi Units Luxembourg |
Lyxor 10Y and Multi Units Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 10Y and Multi Units
The main advantage of trading using opposite Lyxor 10Y and Multi Units positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 10Y position performs unexpectedly, Multi Units 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 Multi Units will offset losses from the drop in Multi Units' long position.| Lyxor 10Y vs. Vanguard FTSE Developed | Lyxor 10Y vs. Leverage Shares 2x | Lyxor 10Y vs. Amundi Index Solutions | Lyxor 10Y vs. Amundi Index Solutions |
| Multi Units vs. Multi Units France | Multi Units vs. Multi Units Luxembourg | Multi Units vs. Multi Units Luxembourg | Multi Units vs. Multi Units France |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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