Correlation Between Lyxor 10Y and WisdomTree Long
Can any of the company-specific risk be diversified away by investing in both Lyxor 10Y and WisdomTree Long 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 Long 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 Long GBP, you can compare the effects of market volatilities on Lyxor 10Y and WisdomTree Long 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 Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 10Y and WisdomTree Long.
Diversification Opportunities for Lyxor 10Y and WisdomTree Long
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lyxor and WisdomTree is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 10Y Inflation and WisdomTree Long GBP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Long GBP 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 Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Long GBP has no effect on the direction of Lyxor 10Y i.e., Lyxor 10Y and WisdomTree Long go up and down completely randomly.
Pair Corralation between Lyxor 10Y and WisdomTree Long
Assuming the 90 days trading horizon Lyxor 10Y Inflation is expected to generate 0.17 times more return on investment than WisdomTree Long. However, Lyxor 10Y Inflation is 5.91 times less risky than WisdomTree Long. It trades about 0.14 of its potential returns per unit of risk. WisdomTree Long GBP is currently generating about -0.25 per unit of risk. If you would invest 12,865 in Lyxor 10Y Inflation on August 30, 2024 and sell it today you would earn a total of 189.00 from holding Lyxor 10Y Inflation or generate 1.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor 10Y Inflation vs. WisdomTree Long GBP
Performance |
| Timeline |
| Lyxor 10Y Inflation |
| WisdomTree Long GBP |
Lyxor 10Y and WisdomTree Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor 10Y and WisdomTree Long
The main advantage of trading using opposite Lyxor 10Y and WisdomTree Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 10Y position performs unexpectedly, WisdomTree Long 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 Long will offset losses from the drop in WisdomTree Long's 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 |
| WisdomTree Long vs. Vanguard FTSE Developed | WisdomTree Long vs. Leverage Shares 2x | WisdomTree Long vs. Amundi Index Solutions | WisdomTree Long vs. Amundi Index Solutions |
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.
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