Correlation Between Lyxor UCITS and Invesco EQQQ
Can any of the company-specific risk be diversified away by investing in both Lyxor UCITS and Invesco EQQQ 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 UCITS and Invesco EQQQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor UCITS Stoxx and Invesco EQQQ NASDAQ 100, you can compare the effects of market volatilities on Lyxor UCITS and Invesco EQQQ 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 UCITS with a short position of Invesco EQQQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor UCITS and Invesco EQQQ.
Diversification Opportunities for Lyxor UCITS and Invesco EQQQ
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lyxor and Invesco is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor UCITS Stoxx and Invesco EQQQ NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco EQQQ NASDAQ and Lyxor UCITS 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 UCITS Stoxx are associated (or correlated) with Invesco EQQQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco EQQQ NASDAQ has no effect on the direction of Lyxor UCITS i.e., Lyxor UCITS and Invesco EQQQ go up and down completely randomly.
Pair Corralation between Lyxor UCITS and Invesco EQQQ
Assuming the 90 days trading horizon Lyxor UCITS is expected to generate 2.26 times less return on investment than Invesco EQQQ. But when comparing it to its historical volatility, Lyxor UCITS Stoxx is 1.24 times less risky than Invesco EQQQ. It trades about 0.06 of its potential returns per unit of risk. Invesco EQQQ NASDAQ 100 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 26,954 in Invesco EQQQ NASDAQ 100 on August 27, 2024 and sell it today you would earn a total of 21,766 from holding Invesco EQQQ NASDAQ 100 or generate 80.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor UCITS Stoxx vs. Invesco EQQQ NASDAQ 100
Performance |
| Timeline |
| Lyxor UCITS Stoxx |
| Invesco EQQQ NASDAQ |
Lyxor UCITS and Invesco EQQQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor UCITS and Invesco EQQQ
The main advantage of trading using opposite Lyxor UCITS and Invesco EQQQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor UCITS position performs unexpectedly, Invesco EQQQ 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 Invesco EQQQ will offset losses from the drop in Invesco EQQQ's long position.| Lyxor UCITS vs. Lyxor Index Fund | Lyxor UCITS vs. Multi Units France | Lyxor UCITS vs. Lyxor UCITS MSCI | Lyxor UCITS vs. Multi Units France |
| Invesco EQQQ vs. Lyxor UCITS Japan | Invesco EQQQ vs. Lyxor UCITS Stoxx | Invesco EQQQ vs. Gold Bullion Securities | Invesco EQQQ vs. Xtrackers MSCI Europe |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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