Correlation Between Lyxor 10Y and WisdomTree Cocoa
Can any of the company-specific risk be diversified away by investing in both Lyxor 10Y and WisdomTree Cocoa 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 Cocoa 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 Cocoa, you can compare the effects of market volatilities on Lyxor 10Y and WisdomTree Cocoa 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 Cocoa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 10Y and WisdomTree Cocoa.
Diversification Opportunities for Lyxor 10Y and WisdomTree Cocoa
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lyxor and WisdomTree is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 10Y Inflation and WisdomTree Cocoa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Cocoa 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 Cocoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Cocoa has no effect on the direction of Lyxor 10Y i.e., Lyxor 10Y and WisdomTree Cocoa go up and down completely randomly.
Pair Corralation between Lyxor 10Y and WisdomTree Cocoa
Assuming the 90 days trading horizon Lyxor 10Y Inflation is expected to under-perform the WisdomTree Cocoa. But the etf apears to be less risky and, when comparing its historical volatility, Lyxor 10Y Inflation is 13.22 times less risky than WisdomTree Cocoa. The etf trades about -0.02 of its potential returns per unit of risk. The WisdomTree Cocoa is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,105 in WisdomTree Cocoa on August 31, 2024 and sell it today you would earn a total of 307.00 from holding WisdomTree Cocoa or generate 27.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor 10Y Inflation vs. WisdomTree Cocoa
Performance |
| Timeline |
| Lyxor 10Y Inflation |
| WisdomTree Cocoa |
Lyxor 10Y and WisdomTree Cocoa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 10Y and WisdomTree Cocoa
The main advantage of trading using opposite Lyxor 10Y and WisdomTree Cocoa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 10Y position performs unexpectedly, WisdomTree Cocoa 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 Cocoa will offset losses from the drop in WisdomTree Cocoa's long position.| Lyxor 10Y vs. Lyxor Smart Overnight | Lyxor 10Y vs. Lyxor UCITS EuroMTS | Lyxor 10Y vs. Lyxor Core UK | Lyxor 10Y vs. Lyxor Core Global |
| WisdomTree Cocoa vs. Leverage Shares 3x | WisdomTree Cocoa vs. WisdomTree Natural Gas | WisdomTree Cocoa vs. GraniteShares 3x Short | WisdomTree Cocoa vs. Leverage Shares 3x |
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 Stocks Directory module to find actively traded stocks across global markets.
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