Correlation Between Lyxor MSCI and ZKB Silver
Can any of the company-specific risk be diversified away by investing in both Lyxor MSCI and ZKB Silver 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 ZKB Silver 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 ZKB Silver ETF, you can compare the effects of market volatilities on Lyxor MSCI and ZKB Silver 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 ZKB Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor MSCI and ZKB Silver.
Diversification Opportunities for Lyxor MSCI and ZKB Silver
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lyxor and ZKB is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor MSCI China and ZKB Silver ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Silver ETF 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 ZKB Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Silver ETF has no effect on the direction of Lyxor MSCI i.e., Lyxor MSCI and ZKB Silver go up and down completely randomly.
Pair Corralation between Lyxor MSCI and ZKB Silver
Assuming the 90 days trading horizon Lyxor MSCI China is expected to generate 0.8 times more return on investment than ZKB Silver. However, Lyxor MSCI China is 1.25 times less risky than ZKB Silver. It trades about -0.15 of its potential returns per unit of risk. ZKB Silver ETF is currently generating about -0.21 per unit of risk. If you would invest 2,289 in Lyxor MSCI China on September 5, 2024 and sell it today you would lose (111.00) from holding Lyxor MSCI China or give up 4.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor MSCI China vs. ZKB Silver ETF
Performance |
| Timeline |
| Lyxor MSCI China |
| ZKB Silver ETF |
Lyxor MSCI and ZKB Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor MSCI and ZKB Silver
The main advantage of trading using opposite Lyxor MSCI and ZKB Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor MSCI position performs unexpectedly, ZKB Silver 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 ZKB Silver will offset losses from the drop in ZKB Silver's long position.The idea behind Lyxor MSCI China and ZKB Silver ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ZKB Silver vs. Vanguard SP 500 | ZKB Silver vs. iShares Core SP | ZKB Silver vs. Lyxor Japan UCITS | ZKB Silver vs. iShares SP 500 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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