Correlation Between Lyxor UCITS and WisdomTree Equity
Can any of the company-specific risk be diversified away by investing in both Lyxor UCITS and WisdomTree Equity 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 Equity 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 Equity Income, you can compare the effects of market volatilities on Lyxor UCITS and WisdomTree Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor UCITS and WisdomTree Equity.
Diversification Opportunities for Lyxor UCITS and WisdomTree Equity
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lyxor and WisdomTree is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor UCITS Stoxx and WisdomTree Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Equity Income 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Equity Income has no effect on the direction of Lyxor UCITS i.e., Lyxor UCITS and WisdomTree Equity go up and down completely randomly.
Pair Corralation between Lyxor UCITS and WisdomTree Equity
Assuming the 90 days trading horizon Lyxor UCITS Stoxx is expected to under-perform the WisdomTree Equity. In addition to that, Lyxor UCITS is 1.43 times more volatile than WisdomTree Equity Income. It trades about -0.1 of its total potential returns per unit of risk. WisdomTree Equity Income is currently generating about 0.41 per unit of volatility. If you would invest 3,068 in WisdomTree Equity Income on September 2, 2024 and sell it today you would earn a total of 174.00 from holding WisdomTree Equity Income or generate 5.67% 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. WisdomTree Equity Income
Performance |
| Timeline |
| Lyxor UCITS Stoxx |
| WisdomTree Equity Income |
Lyxor UCITS and WisdomTree Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor UCITS and WisdomTree Equity
The main advantage of trading using opposite Lyxor UCITS and WisdomTree Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor UCITS position performs unexpectedly, WisdomTree Equity 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 Equity will offset losses from the drop in WisdomTree Equity's long position.The idea behind Lyxor UCITS Stoxx and WisdomTree Equity Income 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 Equity vs. iShares Core SP | WisdomTree Equity vs. iShares Core MSCI | WisdomTree Equity 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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