Correlation Between Lyxor Japan and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both Lyxor Japan and Xtrackers MSCI 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 Xtrackers MSCI 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 Xtrackers MSCI EMU, you can compare the effects of market volatilities on Lyxor Japan and Xtrackers MSCI 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 Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor Japan and Xtrackers MSCI.
Diversification Opportunities for Lyxor Japan and Xtrackers MSCI
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lyxor and Xtrackers is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor Japan UCITS and Xtrackers MSCI EMU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI EMU 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI EMU has no effect on the direction of Lyxor Japan i.e., Lyxor Japan and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between Lyxor Japan and Xtrackers MSCI
Assuming the 90 days trading horizon Lyxor Japan UCITS is expected to generate 1.59 times more return on investment than Xtrackers MSCI. However, Lyxor Japan is 1.59 times more volatile than Xtrackers MSCI EMU. It trades about 0.06 of its potential returns per unit of risk. Xtrackers MSCI EMU is currently generating about -0.18 per unit of risk. If you would invest 2,571,000 in Lyxor Japan UCITS on August 28, 2024 and sell it today you would earn a total of 56,000 from holding Lyxor Japan UCITS or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Lyxor Japan UCITS vs. Xtrackers MSCI EMU
Performance |
| Timeline |
| Lyxor Japan UCITS |
| Xtrackers MSCI EMU |
Lyxor Japan and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor Japan and Xtrackers MSCI
The main advantage of trading using opposite Lyxor Japan and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor Japan position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI's long position.| Lyxor Japan vs. UBSFund Solutions MSCI | Lyxor Japan vs. iShares VII PLC | Lyxor Japan vs. iShares SP 500 | Lyxor Japan vs. Lyxor UCITS Stoxx |
| Xtrackers MSCI vs. UBSFund Solutions MSCI | Xtrackers MSCI vs. iShares VII PLC | Xtrackers MSCI vs. iShares SP 500 | Xtrackers MSCI vs. Lyxor UCITS Stoxx |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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