Correlation Between Lyxor UCITS and IShares China
Can any of the company-specific risk be diversified away by investing in both Lyxor UCITS and IShares China 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 UCITS and IShares China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor UCITS Japan and iShares China CNY, you can compare the effects of market volatilities on Lyxor UCITS and IShares China 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 UCITS with a short position of IShares China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor UCITS and IShares China.
Diversification Opportunities for Lyxor UCITS and IShares China
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lyxor and IShares is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor UCITS Japan and iShares China CNY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China CNY and Lyxor UCITS 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 UCITS Japan are associated (or correlated) with IShares China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China CNY has no effect on the direction of Lyxor UCITS i.e., Lyxor UCITS and IShares China go up and down completely randomly.
Pair Corralation between Lyxor UCITS and IShares China
Assuming the 90 days trading horizon Lyxor UCITS Japan is expected to under-perform the IShares China. In addition to that, Lyxor UCITS is 2.16 times more volatile than iShares China CNY. It trades about -0.01 of its total potential returns per unit of risk. iShares China CNY is currently generating about 0.15 per unit of volatility. If you would invest 558.00 in iShares China CNY on September 23, 2024 and sell it today you would earn a total of 7.00 from holding iShares China CNY or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor UCITS Japan vs. iShares China CNY
Performance |
| Timeline |
| Lyxor UCITS Japan |
| iShares China CNY |
Lyxor UCITS and IShares China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor UCITS and IShares China
The main advantage of trading using opposite Lyxor UCITS and IShares China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor UCITS position performs unexpectedly, IShares China 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 IShares China will offset losses from the drop in IShares China's long position.| Lyxor UCITS vs. Lyxor UCITS Japan | Lyxor UCITS vs. Lyxor UCITS Stoxx | Lyxor UCITS vs. Amundi CAC 40 | Lyxor UCITS vs. Gold Bullion Securities |
| IShares China vs. Lyxor UCITS Japan | IShares China vs. Lyxor UCITS Japan | IShares China vs. Lyxor UCITS Stoxx | IShares China vs. Amundi CAC 40 |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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