Correlation Between Lyxor MSCI and LG Clean
Can any of the company-specific risk be diversified away by investing in both Lyxor MSCI and LG Clean 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 LG Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor MSCI Brazil and LG Clean Water, you can compare the effects of market volatilities on Lyxor MSCI and LG Clean 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 LG Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor MSCI and LG Clean.
Diversification Opportunities for Lyxor MSCI and LG Clean
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lyxor and GLUG is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor MSCI Brazil and LG Clean Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Clean Water 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 Brazil are associated (or correlated) with LG Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Clean Water has no effect on the direction of Lyxor MSCI i.e., Lyxor MSCI and LG Clean go up and down completely randomly.
Pair Corralation between Lyxor MSCI and LG Clean
Assuming the 90 days trading horizon Lyxor MSCI is expected to generate 2.85 times less return on investment than LG Clean. In addition to that, Lyxor MSCI is 1.49 times more volatile than LG Clean Water. It trades about 0.01 of its total potential returns per unit of risk. LG Clean Water is currently generating about 0.04 per unit of volatility. If you would invest 1,370 in LG Clean Water on September 3, 2024 and sell it today you would earn a total of 269.00 from holding LG Clean Water or generate 19.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Lyxor MSCI Brazil vs. LG Clean Water
Performance |
| Timeline |
| Lyxor MSCI Brazil |
| LG Clean Water |
Lyxor MSCI and LG Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor MSCI and LG Clean
The main advantage of trading using opposite Lyxor MSCI and LG Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor MSCI position performs unexpectedly, LG Clean 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 LG Clean will offset losses from the drop in LG Clean's long position.The idea behind Lyxor MSCI Brazil and LG Clean Water 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.| LG Clean vs. Vanguard FTSE Emerging | LG Clean vs. UBS ETF MSCI | LG Clean vs. VanEck Solana ETN | LG Clean vs. iShares Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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