Correlation Between Lyxor Japan and HSBC EMERGING
Can any of the company-specific risk be diversified away by investing in both Lyxor Japan and HSBC EMERGING 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 Japan and HSBC EMERGING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor Japan UCITS and HSBC EMERGING MARKET, you can compare the effects of market volatilities on Lyxor Japan and HSBC EMERGING 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 Japan with a short position of HSBC EMERGING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor Japan and HSBC EMERGING.
Diversification Opportunities for Lyxor Japan and HSBC EMERGING
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lyxor and HSBC is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor Japan UCITS and HSBC EMERGING MARKET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC EMERGING MARKET and Lyxor Japan 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 Japan UCITS are associated (or correlated) with HSBC EMERGING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC EMERGING MARKET has no effect on the direction of Lyxor Japan i.e., Lyxor Japan and HSBC EMERGING go up and down completely randomly.
Pair Corralation between Lyxor Japan and HSBC EMERGING
Assuming the 90 days trading horizon Lyxor Japan UCITS is expected to generate 1.47 times more return on investment than HSBC EMERGING. However, Lyxor Japan is 1.47 times more volatile than HSBC EMERGING MARKET. It trades about 0.07 of its potential returns per unit of risk. HSBC EMERGING MARKET is currently generating about 0.04 per unit of risk. If you would invest 1,826,412 in Lyxor Japan UCITS on August 26, 2024 and sell it today you would earn a total of 788,088 from holding Lyxor Japan UCITS or generate 43.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.34% |
| Values | Daily Returns |
Lyxor Japan UCITS vs. HSBC EMERGING MARKET
Performance |
| Timeline |
| Lyxor Japan UCITS |
| HSBC EMERGING MARKET |
Lyxor Japan and HSBC EMERGING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor Japan and HSBC EMERGING
The main advantage of trading using opposite Lyxor Japan and HSBC EMERGING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor Japan position performs unexpectedly, HSBC EMERGING 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 HSBC EMERGING will offset losses from the drop in HSBC EMERGING's long position.| Lyxor Japan vs. UBSFund Solutions MSCI | Lyxor Japan vs. iShares VII PLC | Lyxor Japan vs. iShares Core MSCI | Lyxor Japan vs. iShares SP 500 |
| HSBC EMERGING vs. UBSFund Solutions MSCI | HSBC EMERGING vs. iShares VII PLC | HSBC EMERGING vs. Lyxor Japan UCITS | HSBC EMERGING 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |