Correlation Between Lyxor MSCI and Invesco EQQQ
Can any of the company-specific risk be diversified away by investing in both Lyxor MSCI and Invesco EQQQ 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 Invesco EQQQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor MSCI Emerging and Invesco EQQQ NASDAQ 100, you can compare the effects of market volatilities on Lyxor MSCI and Invesco EQQQ 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 Invesco EQQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor MSCI and Invesco EQQQ.
Diversification Opportunities for Lyxor MSCI and Invesco EQQQ
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lyxor and Invesco is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor MSCI Emerging and Invesco EQQQ NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco EQQQ NASDAQ 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 Emerging are associated (or correlated) with Invesco EQQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco EQQQ NASDAQ has no effect on the direction of Lyxor MSCI i.e., Lyxor MSCI and Invesco EQQQ go up and down completely randomly.
Pair Corralation between Lyxor MSCI and Invesco EQQQ
Assuming the 90 days trading horizon Lyxor MSCI Emerging is expected to under-perform the Invesco EQQQ. In addition to that, Lyxor MSCI is 1.68 times more volatile than Invesco EQQQ NASDAQ 100. It trades about -0.63 of its total potential returns per unit of risk. Invesco EQQQ NASDAQ 100 is currently generating about 0.26 per unit of volatility. If you would invest 48,960 in Invesco EQQQ NASDAQ 100 on September 4, 2024 and sell it today you would earn a total of 2,710 from holding Invesco EQQQ NASDAQ 100 or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 18.18% |
| Values | Daily Returns |
Lyxor MSCI Emerging vs. Invesco EQQQ NASDAQ 100
Performance |
| Timeline |
| Lyxor MSCI Emerging |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Invesco EQQQ NASDAQ |
Lyxor MSCI and Invesco EQQQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor MSCI and Invesco EQQQ
The main advantage of trading using opposite Lyxor MSCI and Invesco EQQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor MSCI position performs unexpectedly, Invesco EQQQ 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 Invesco EQQQ will offset losses from the drop in Invesco EQQQ's long position.| Lyxor MSCI vs. UBSFund Solutions MSCI | Lyxor MSCI vs. Vanguard SP 500 | Lyxor MSCI vs. iShares VII PLC | Lyxor MSCI vs. iShares Core SP |
| Invesco EQQQ vs. Invesco AT1 Capital | Invesco EQQQ vs. Invesco EURO STOXX | Invesco EQQQ vs. Invesco AT1 Capital | Invesco EQQQ vs. Invesco Treasury Bond |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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