Correlation Between Lyxor Japan and VanEck Oil
Can any of the company-specific risk be diversified away by investing in both Lyxor Japan and VanEck Oil 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 VanEck Oil 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 VanEck Oil Services, you can compare the effects of market volatilities on Lyxor Japan and VanEck Oil 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 VanEck Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor Japan and VanEck Oil.
Diversification Opportunities for Lyxor Japan and VanEck Oil
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lyxor and VanEck is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor Japan UCITS and VanEck Oil Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Oil Services 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 VanEck Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Oil Services has no effect on the direction of Lyxor Japan i.e., Lyxor Japan and VanEck Oil go up and down completely randomly.
Pair Corralation between Lyxor Japan and VanEck Oil
Assuming the 90 days trading horizon Lyxor Japan UCITS is expected to generate 0.89 times more return on investment than VanEck Oil. However, Lyxor Japan UCITS is 1.12 times less risky than VanEck Oil. It trades about 0.07 of its potential returns per unit of risk. VanEck Oil Services is currently generating about 0.02 per unit of risk. If you would invest 1,805,600 in Lyxor Japan UCITS on September 14, 2024 and sell it today you would earn a total of 841,900 from holding Lyxor Japan UCITS or generate 46.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.52% |
| Values | Daily Returns |
Lyxor Japan UCITS vs. VanEck Oil Services
Performance |
| Timeline |
| Lyxor Japan UCITS |
| VanEck Oil Services |
Lyxor Japan and VanEck Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor Japan and VanEck Oil
The main advantage of trading using opposite Lyxor Japan and VanEck Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor Japan position performs unexpectedly, VanEck Oil 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 VanEck Oil will offset losses from the drop in VanEck Oil's long position.| Lyxor Japan vs. Lyxor Japan UCITS | Lyxor Japan vs. Lyxor Euro Government | Lyxor Japan vs. Lyxor MSCI China |
| VanEck Oil vs. UBSFund Solutions MSCI | VanEck Oil vs. Vanguard SP 500 | VanEck Oil vs. iShares VII PLC | VanEck Oil 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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