Correlation Between Multi Units and Lyxor Commodities
Can any of the company-specific risk be diversified away by investing in both Multi Units and Lyxor Commodities 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 Commodities 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 Commodities RefinitivCoreCommodity, you can compare the effects of market volatilities on Multi Units and Lyxor Commodities 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 Commodities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Units and Lyxor Commodities.
Diversification Opportunities for Multi Units and Lyxor Commodities
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Multi and Lyxor is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Multi Units France and Lyxor Commodities RefinitivCor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Commodities 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 Commodities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Commodities has no effect on the direction of Multi Units i.e., Multi Units and Lyxor Commodities go up and down completely randomly.
Pair Corralation between Multi Units and Lyxor Commodities
Assuming the 90 days trading horizon Multi Units is expected to generate 1.52 times less return on investment than Lyxor Commodities. But when comparing it to its historical volatility, Multi Units France is 1.02 times less risky than Lyxor Commodities. It trades about 0.07 of its potential returns per unit of risk. Lyxor Commodities RefinitivCoreCommodity is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,163 in Lyxor Commodities RefinitivCoreCommodity on September 2, 2024 and sell it today you would earn a total of 140.00 from holding Lyxor Commodities RefinitivCoreCommodity or generate 6.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.48% |
| Values | Daily Returns |
Multi Units France vs. Lyxor Commodities RefinitivCor
Performance |
| Timeline |
| Multi Units France |
| Lyxor Commodities |
Multi Units and Lyxor Commodities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Units and Lyxor Commodities
The main advantage of trading using opposite Multi Units and Lyxor Commodities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Units position performs unexpectedly, Lyxor Commodities 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 Commodities will offset losses from the drop in Lyxor Commodities' long position.| Multi Units vs. Lyxor UCITS MSCI | Multi Units vs. Lyxor UCITS Stoxx | Multi Units vs. Multi Units France | Multi Units vs. Lyxor MSCI Brazil |
| Lyxor Commodities vs. Lyxor MSCI Brazil | Lyxor Commodities vs. Multi Units France | Lyxor Commodities vs. Lyxor UCITS Stoxx | Lyxor Commodities vs. Multi Units France |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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