Correlation Between Lyxor SMI and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both Lyxor SMI and BNP Paribas 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 SMI and BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor SMI Daily and BNP Paribas Easy, you can compare the effects of market volatilities on Lyxor SMI and BNP Paribas 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 SMI with a short position of BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor SMI and BNP Paribas.
Diversification Opportunities for Lyxor SMI and BNP Paribas
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lyxor and BNP is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor SMI Daily and BNP Paribas Easy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Easy and Lyxor SMI 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 SMI Daily are associated (or correlated) with BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas Easy has no effect on the direction of Lyxor SMI i.e., Lyxor SMI and BNP Paribas go up and down completely randomly.
Pair Corralation between Lyxor SMI and BNP Paribas
Assuming the 90 days trading horizon Lyxor SMI Daily is expected to generate 3.01 times more return on investment than BNP Paribas. However, Lyxor SMI is 3.01 times more volatile than BNP Paribas Easy. It trades about 0.12 of its potential returns per unit of risk. BNP Paribas Easy is currently generating about -0.07 per unit of risk. If you would invest 208.00 in Lyxor SMI Daily on August 31, 2024 and sell it today you would earn a total of 10.00 from holding Lyxor SMI Daily or generate 4.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lyxor SMI Daily vs. BNP Paribas Easy
Performance |
| Timeline |
| Lyxor SMI Daily |
| BNP Paribas Easy |
Lyxor SMI and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor SMI and BNP Paribas
The main advantage of trading using opposite Lyxor SMI and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor SMI position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' long position.| Lyxor SMI vs. UBSFund Solutions MSCI | Lyxor SMI vs. iShares Core SP | Lyxor SMI vs. iShares Core MSCI | Lyxor SMI vs. Lyxor UCITS Stoxx |
| BNP Paribas vs. UBSFund Solutions MSCI | BNP Paribas vs. iShares Core SP | BNP Paribas vs. iShares Core MSCI | BNP Paribas 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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