Correlation Between Lyxor MSCI and MULTI UNITS
Can any of the company-specific risk be diversified away by investing in both Lyxor MSCI and MULTI UNITS 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 MSCI and MULTI UNITS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor MSCI China and MULTI UNITS LUXEMBOURG , you can compare the effects of market volatilities on Lyxor MSCI and MULTI UNITS 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 MSCI with a short position of MULTI UNITS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor MSCI and MULTI UNITS.
Diversification Opportunities for Lyxor MSCI and MULTI UNITS
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lyxor and MULTI is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor MSCI China and MULTI UNITS LUXEMBOURG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MULTI UNITS LUXEMBOURG and Lyxor MSCI 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 MSCI China are associated (or correlated) with MULTI UNITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MULTI UNITS LUXEMBOURG has no effect on the direction of Lyxor MSCI i.e., Lyxor MSCI and MULTI UNITS go up and down completely randomly.
Pair Corralation between Lyxor MSCI and MULTI UNITS
Assuming the 90 days trading horizon Lyxor MSCI is expected to generate 1.81 times less return on investment than MULTI UNITS. In addition to that, Lyxor MSCI is 1.15 times more volatile than MULTI UNITS LUXEMBOURG . It trades about 0.03 of its total potential returns per unit of risk. MULTI UNITS LUXEMBOURG is currently generating about 0.07 per unit of volatility. If you would invest 13,816 in MULTI UNITS LUXEMBOURG on September 3, 2024 and sell it today you would earn a total of 3,558 from holding MULTI UNITS LUXEMBOURG or generate 25.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor MSCI China vs. MULTI UNITS LUXEMBOURG
Performance |
| Timeline |
| Lyxor MSCI China |
| MULTI UNITS LUXEMBOURG |
Lyxor MSCI and MULTI UNITS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor MSCI and MULTI UNITS
The main advantage of trading using opposite Lyxor MSCI and MULTI UNITS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor MSCI position performs unexpectedly, MULTI UNITS 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 MULTI UNITS will offset losses from the drop in MULTI UNITS's long position.| Lyxor MSCI vs. UBSFund Solutions MSCI | Lyxor MSCI vs. Vanguard SP 500 | Lyxor MSCI vs. iShares VII PLC | Lyxor MSCI vs. iShares Core SP |
| MULTI UNITS vs. UBSFund Solutions MSCI | MULTI UNITS vs. Vanguard SP 500 | MULTI UNITS vs. iShares VII PLC | MULTI UNITS vs. iShares Core SP |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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