Correlation Between Lyxor SMI and UBSFund Solutions
Can any of the company-specific risk be diversified away by investing in both Lyxor SMI and UBSFund Solutions 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 UBSFund Solutions 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 UBSFund Solutions MSCI, you can compare the effects of market volatilities on Lyxor SMI and UBSFund Solutions 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 UBSFund Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor SMI and UBSFund Solutions.
Diversification Opportunities for Lyxor SMI and UBSFund Solutions
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lyxor and UBSFund is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor SMI Daily and UBSFund Solutions MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBSFund Solutions MSCI 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 UBSFund Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBSFund Solutions MSCI has no effect on the direction of Lyxor SMI i.e., Lyxor SMI and UBSFund Solutions go up and down completely randomly.
Pair Corralation between Lyxor SMI and UBSFund Solutions
Assuming the 90 days trading horizon Lyxor SMI Daily is expected to generate 2.02 times more return on investment than UBSFund Solutions. However, Lyxor SMI is 2.02 times more volatile than UBSFund Solutions MSCI. It trades about 0.02 of its potential returns per unit of risk. UBSFund Solutions MSCI is currently generating about 0.02 per unit of risk. If you would invest 209.00 in Lyxor SMI Daily on September 1, 2024 and sell it today you would earn a total of 6.00 from holding Lyxor SMI Daily or generate 2.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
Lyxor SMI Daily vs. UBSFund Solutions MSCI
Performance |
| Timeline |
| Lyxor SMI Daily |
| UBSFund Solutions MSCI |
Lyxor SMI and UBSFund Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor SMI and UBSFund Solutions
The main advantage of trading using opposite Lyxor SMI and UBSFund Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor SMI position performs unexpectedly, UBSFund Solutions 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 UBSFund Solutions will offset losses from the drop in UBSFund Solutions' long position.The idea behind Lyxor SMI Daily and UBSFund Solutions MSCI 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.| UBSFund Solutions vs. iShares Core SP | UBSFund Solutions vs. iShares Core MSCI | UBSFund Solutions 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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