Correlation Between LYXOR EURO and LYXOR DAILY
Can any of the company-specific risk be diversified away by investing in both LYXOR EURO and LYXOR DAILY 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 EURO and LYXOR DAILY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LYXOR EURO STOXX and LYXOR DAILY SHORTDAX, you can compare the effects of market volatilities on LYXOR EURO and LYXOR DAILY 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 EURO with a short position of LYXOR DAILY. Check out your portfolio center. Please also check ongoing floating volatility patterns of LYXOR EURO and LYXOR DAILY.
Diversification Opportunities for LYXOR EURO and LYXOR DAILY
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LYXOR and LYXOR is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding LYXOR EURO STOXX and LYXOR DAILY SHORTDAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYXOR DAILY SHORTDAX and LYXOR EURO 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 EURO STOXX are associated (or correlated) with LYXOR DAILY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYXOR DAILY SHORTDAX has no effect on the direction of LYXOR EURO i.e., LYXOR EURO and LYXOR DAILY go up and down completely randomly.
Pair Corralation between LYXOR EURO and LYXOR DAILY
Assuming the 90 days trading horizon LYXOR EURO STOXX is expected to generate 1.38 times more return on investment than LYXOR DAILY. However, LYXOR EURO is 1.38 times more volatile than LYXOR DAILY SHORTDAX. It trades about 0.12 of its potential returns per unit of risk. LYXOR DAILY SHORTDAX is currently generating about 0.04 per unit of risk. If you would invest 77.00 in LYXOR EURO STOXX on August 24, 2024 and sell it today you would earn a total of 4.00 from holding LYXOR EURO STOXX or generate 5.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
LYXOR EURO STOXX vs. LYXOR DAILY SHORTDAX
Performance |
| Timeline |
| LYXOR EURO STOXX |
| LYXOR DAILY SHORTDAX |
LYXOR EURO and LYXOR DAILY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LYXOR EURO and LYXOR DAILY
The main advantage of trading using opposite LYXOR EURO and LYXOR DAILY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LYXOR EURO position performs unexpectedly, LYXOR DAILY 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 DAILY will offset losses from the drop in LYXOR DAILY's long position.| LYXOR EURO vs. LYXOR DAILY SHORTDAX | LYXOR EURO vs. LYXOR EURO STOXX | LYXOR EURO vs. LYXOR Index Fund | LYXOR EURO vs. LYXOR DAILY SHORTDAX |
| LYXOR DAILY vs. LYXOR EURO STOXX | LYXOR DAILY vs. LYXOR DAILY SHORTDAX | LYXOR DAILY vs. LYXOR EURO STOXX | LYXOR DAILY vs. LYXOR Index Fund |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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