Correlation Between Lyxor MSCI and ZKB Palladium
Can any of the company-specific risk be diversified away by investing in both Lyxor MSCI and ZKB Palladium 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 ZKB Palladium 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 ZKB Palladium ETF, you can compare the effects of market volatilities on Lyxor MSCI and ZKB Palladium 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 ZKB Palladium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor MSCI and ZKB Palladium.
Diversification Opportunities for Lyxor MSCI and ZKB Palladium
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lyxor and ZKB is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor MSCI Brazil and ZKB Palladium ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Palladium ETF 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 ZKB Palladium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Palladium ETF has no effect on the direction of Lyxor MSCI i.e., Lyxor MSCI and ZKB Palladium go up and down completely randomly.
Pair Corralation between Lyxor MSCI and ZKB Palladium
Assuming the 90 days trading horizon Lyxor MSCI Brazil is expected to under-perform the ZKB Palladium. But the etf apears to be less risky and, when comparing its historical volatility, Lyxor MSCI Brazil is 2.14 times less risky than ZKB Palladium. The etf trades about -0.06 of its potential returns per unit of risk. The ZKB Palladium ETF is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 25,275 in ZKB Palladium ETF on September 2, 2024 and sell it today you would earn a total of 225.00 from holding ZKB Palladium ETF or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor MSCI Brazil vs. ZKB Palladium ETF
Performance |
| Timeline |
| Lyxor MSCI Brazil |
| ZKB Palladium ETF |
Lyxor MSCI and ZKB Palladium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor MSCI and ZKB Palladium
The main advantage of trading using opposite Lyxor MSCI and ZKB Palladium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor MSCI position performs unexpectedly, ZKB Palladium 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 ZKB Palladium will offset losses from the drop in ZKB Palladium's long position.| Lyxor MSCI vs. Procimmo Real Estate | Lyxor MSCI vs. SPDR Dow Jones | Lyxor MSCI vs. Baloise Holding AG | Lyxor MSCI vs. Autoneum Holding AG |
| ZKB Palladium vs. iShares Core SP | ZKB Palladium vs. iShares Core MSCI | ZKB Palladium 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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