Correlation Between Multi Units and Lyxor UCITS
Can any of the company-specific risk be diversified away by investing in both Multi Units and Lyxor UCITS 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 Multi Units and Lyxor UCITS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Units France and Lyxor UCITS Japan, you can compare the effects of market volatilities on Multi Units and Lyxor UCITS 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 Multi Units with a short position of Lyxor UCITS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Units and Lyxor UCITS.
Diversification Opportunities for Multi Units and Lyxor UCITS
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Multi and Lyxor is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Multi Units France and Lyxor UCITS Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor UCITS Japan and Multi Units 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 Multi Units France are associated (or correlated) with Lyxor UCITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor UCITS Japan has no effect on the direction of Multi Units i.e., Multi Units and Lyxor UCITS go up and down completely randomly.
Pair Corralation between Multi Units and Lyxor UCITS
Assuming the 90 days trading horizon Multi Units is expected to generate 1.74 times less return on investment than Lyxor UCITS. In addition to that, Multi Units is 1.37 times more volatile than Lyxor UCITS Japan. It trades about 0.1 of its total potential returns per unit of risk. Lyxor UCITS Japan is currently generating about 0.23 per unit of volatility. If you would invest 15,765 in Lyxor UCITS Japan on August 28, 2024 and sell it today you would earn a total of 632.00 from holding Lyxor UCITS Japan or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Units France vs. Lyxor UCITS Japan
Performance |
| Timeline |
| Multi Units France |
| Lyxor UCITS Japan |
Multi Units and Lyxor UCITS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Units and Lyxor UCITS
The main advantage of trading using opposite Multi Units and Lyxor UCITS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Units position performs unexpectedly, Lyxor UCITS 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 UCITS will offset losses from the drop in Lyxor UCITS's long position.The idea behind Multi Units France and Lyxor UCITS Japan 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.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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