Correlation Between Lyxor MSCI and IShares Public
Can any of the company-specific risk be diversified away by investing in both Lyxor MSCI and IShares Public 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 IShares Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor MSCI India and iShares Public Limited, you can compare the effects of market volatilities on Lyxor MSCI and IShares Public 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 IShares Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor MSCI and IShares Public.
Diversification Opportunities for Lyxor MSCI and IShares Public
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lyxor and IShares is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor MSCI India and iShares Public Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Public 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 India are associated (or correlated) with IShares Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Public has no effect on the direction of Lyxor MSCI i.e., Lyxor MSCI and IShares Public go up and down completely randomly.
Pair Corralation between Lyxor MSCI and IShares Public
Assuming the 90 days trading horizon Lyxor MSCI India is expected to under-perform the IShares Public. In addition to that, Lyxor MSCI is 1.04 times more volatile than iShares Public Limited. It trades about -0.02 of its total potential returns per unit of risk. iShares Public Limited is currently generating about 0.01 per unit of volatility. If you would invest 5,734 in iShares Public Limited on September 2, 2024 and sell it today you would earn a total of 2.00 from holding iShares Public Limited or generate 0.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lyxor MSCI India vs. iShares Public Limited
Performance |
| Timeline |
| Lyxor MSCI India |
| iShares Public |
Lyxor MSCI and IShares Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor MSCI and IShares Public
The main advantage of trading using opposite Lyxor MSCI and IShares Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor MSCI position performs unexpectedly, IShares Public 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 IShares Public will offset losses from the drop in IShares Public's long position.The idea behind Lyxor MSCI India and iShares Public Limited 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.| IShares Public vs. UBS Fund Solutions | IShares Public vs. iShares Core SP | IShares Public vs. iShares Core MSCI |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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