Correlation Between Lyxor UCITS and WisdomTree Wheat
Can any of the company-specific risk be diversified away by investing in both Lyxor UCITS and WisdomTree Wheat 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 WisdomTree Wheat 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 WisdomTree Wheat EUR, you can compare the effects of market volatilities on Lyxor UCITS and WisdomTree Wheat 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 WisdomTree Wheat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor UCITS and WisdomTree Wheat.
Diversification Opportunities for Lyxor UCITS and WisdomTree Wheat
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lyxor and WisdomTree is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor UCITS Japan and WisdomTree Wheat EUR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Wheat EUR 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 WisdomTree Wheat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Wheat EUR has no effect on the direction of Lyxor UCITS i.e., Lyxor UCITS and WisdomTree Wheat go up and down completely randomly.
Pair Corralation between Lyxor UCITS and WisdomTree Wheat
Assuming the 90 days trading horizon Lyxor UCITS Japan is expected to generate 0.7 times more return on investment than WisdomTree Wheat. However, Lyxor UCITS Japan is 1.42 times less risky than WisdomTree Wheat. It trades about 0.06 of its potential returns per unit of risk. WisdomTree Wheat EUR is currently generating about -0.02 per unit of risk. If you would invest 17,819 in Lyxor UCITS Japan on September 4, 2024 and sell it today you would earn a total of 4,051 from holding Lyxor UCITS Japan or generate 22.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.66% |
| Values | Daily Returns |
Lyxor UCITS Japan vs. WisdomTree Wheat EUR
Performance |
| Timeline |
| Lyxor UCITS Japan |
| WisdomTree Wheat EUR |
Lyxor UCITS and WisdomTree Wheat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor UCITS and WisdomTree Wheat
The main advantage of trading using opposite Lyxor UCITS and WisdomTree Wheat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor UCITS position performs unexpectedly, WisdomTree Wheat 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 Wheat will offset losses from the drop in WisdomTree Wheat'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 |
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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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