Correlation Between Lyxor UCITS and Invesco EQQQ
Can any of the company-specific risk be diversified away by investing in both Lyxor UCITS and Invesco EQQQ 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 Invesco EQQQ 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 Invesco EQQQ NASDAQ 100, you can compare the effects of market volatilities on Lyxor UCITS and Invesco EQQQ 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 Invesco EQQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor UCITS and Invesco EQQQ.
Diversification Opportunities for Lyxor UCITS and Invesco EQQQ
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lyxor and Invesco is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor UCITS Japan and Invesco EQQQ NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco EQQQ NASDAQ 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 Invesco EQQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco EQQQ NASDAQ has no effect on the direction of Lyxor UCITS i.e., Lyxor UCITS and Invesco EQQQ go up and down completely randomly.
Pair Corralation between Lyxor UCITS and Invesco EQQQ
Assuming the 90 days trading horizon Lyxor UCITS is expected to generate 1.38 times less return on investment than Invesco EQQQ. In addition to that, Lyxor UCITS is 1.05 times more volatile than Invesco EQQQ NASDAQ 100. It trades about 0.08 of its total potential returns per unit of risk. Invesco EQQQ NASDAQ 100 is currently generating about 0.11 per unit of volatility. If you would invest 26,739 in Invesco EQQQ NASDAQ 100 on August 28, 2024 and sell it today you would earn a total of 21,931 from holding Invesco EQQQ NASDAQ 100 or generate 82.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Lyxor UCITS Japan vs. Invesco EQQQ NASDAQ 100
Performance |
| Timeline |
| Lyxor UCITS Japan |
| Invesco EQQQ NASDAQ |
Lyxor UCITS and Invesco EQQQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor UCITS and Invesco EQQQ
The main advantage of trading using opposite Lyxor UCITS and Invesco EQQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor UCITS position performs unexpectedly, Invesco EQQQ 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 Invesco EQQQ will offset losses from the drop in Invesco EQQQ's long position.| Lyxor UCITS vs. Lyxor UCITS Japan | Lyxor UCITS vs. Amundi Index Solutions | Lyxor UCITS vs. Amundi Index Solutions | Lyxor UCITS 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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