Correlation Between Lyxor SMI and IShares Asia
Can any of the company-specific risk be diversified away by investing in both Lyxor SMI and IShares Asia 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 IShares Asia 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 iShares Asia Property, you can compare the effects of market volatilities on Lyxor SMI and IShares Asia 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 IShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor SMI and IShares Asia.
Diversification Opportunities for Lyxor SMI and IShares Asia
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lyxor and IShares is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor SMI Daily and iShares Asia Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Asia Property 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 IShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Asia Property has no effect on the direction of Lyxor SMI i.e., Lyxor SMI and IShares Asia go up and down completely randomly.
Pair Corralation between Lyxor SMI and IShares Asia
Assuming the 90 days trading horizon Lyxor SMI Daily is expected to under-perform the IShares Asia. In addition to that, Lyxor SMI is 1.78 times more volatile than iShares Asia Property. It trades about -0.02 of its total potential returns per unit of risk. iShares Asia Property is currently generating about -0.01 per unit of volatility. If you would invest 2,064 in iShares Asia Property on August 24, 2024 and sell it today you would lose (138.00) from holding iShares Asia Property or give up 6.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Lyxor SMI Daily vs. iShares Asia Property
Performance |
| Timeline |
| Lyxor SMI Daily |
| iShares Asia Property |
Lyxor SMI and IShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor SMI and IShares Asia
The main advantage of trading using opposite Lyxor SMI and IShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor SMI position performs unexpectedly, IShares Asia 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 IShares Asia will offset losses from the drop in IShares Asia's long position.| Lyxor SMI vs. UBSFund Solutions MSCI | Lyxor SMI vs. iShares VII PLC | Lyxor SMI vs. iShares Core SP | Lyxor SMI vs. Lyxor Japan UCITS |
| IShares Asia vs. UBSFund Solutions MSCI | IShares Asia vs. iShares VII PLC | IShares Asia vs. iShares Core SP | IShares Asia vs. Lyxor Japan UCITS |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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