Correlation Between Lyxor UCITS and WisdomTree Emerging
Can any of the company-specific risk be diversified away by investing in both Lyxor UCITS and WisdomTree Emerging 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 WisdomTree Emerging 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 WisdomTree Emerging Markets, you can compare the effects of market volatilities on Lyxor UCITS and WisdomTree Emerging 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 WisdomTree Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor UCITS and WisdomTree Emerging.
Diversification Opportunities for Lyxor UCITS and WisdomTree Emerging
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lyxor and WisdomTree is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor UCITS Stoxx and WisdomTree Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Emerging 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 WisdomTree Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Emerging has no effect on the direction of Lyxor UCITS i.e., Lyxor UCITS and WisdomTree Emerging go up and down completely randomly.
Pair Corralation between Lyxor UCITS and WisdomTree Emerging
Assuming the 90 days trading horizon Lyxor UCITS Stoxx is expected to generate 0.54 times more return on investment than WisdomTree Emerging. However, Lyxor UCITS Stoxx is 1.84 times less risky than WisdomTree Emerging. It trades about 0.06 of its potential returns per unit of risk. WisdomTree Emerging Markets is currently generating about 0.02 per unit of risk. If you would invest 4,018 in Lyxor UCITS Stoxx on September 2, 2024 and sell it today you would earn a total of 1,152 from holding Lyxor UCITS Stoxx or generate 28.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.46% |
| Values | Daily Returns |
Lyxor UCITS Stoxx vs. WisdomTree Emerging Markets
Performance |
| Timeline |
| Lyxor UCITS Stoxx |
| WisdomTree Emerging |
Lyxor UCITS and WisdomTree Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor UCITS and WisdomTree Emerging
The main advantage of trading using opposite Lyxor UCITS and WisdomTree Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor UCITS position performs unexpectedly, WisdomTree Emerging 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 WisdomTree Emerging will offset losses from the drop in WisdomTree Emerging's long position.The idea behind Lyxor UCITS Stoxx and WisdomTree Emerging Markets 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.| WisdomTree Emerging vs. iShares Core SP | WisdomTree Emerging vs. iShares Core MSCI | WisdomTree Emerging 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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