Correlation Between Lyxor UCITS and WisdomTree Europe
Can any of the company-specific risk be diversified away by investing in both Lyxor UCITS and WisdomTree Europe 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 Europe 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 Europe Equity, you can compare the effects of market volatilities on Lyxor UCITS and WisdomTree Europe 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 Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor UCITS and WisdomTree Europe.
Diversification Opportunities for Lyxor UCITS and WisdomTree Europe
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lyxor and WisdomTree is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor UCITS Stoxx and WisdomTree Europe Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Europe Equity 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 Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Europe Equity has no effect on the direction of Lyxor UCITS i.e., Lyxor UCITS and WisdomTree Europe go up and down completely randomly.
Pair Corralation between Lyxor UCITS and WisdomTree Europe
Assuming the 90 days trading horizon Lyxor UCITS Stoxx is expected to generate 1.17 times more return on investment than WisdomTree Europe. However, Lyxor UCITS is 1.17 times more volatile than WisdomTree Europe Equity. It trades about 0.05 of its potential returns per unit of risk. WisdomTree Europe Equity is currently generating about 0.01 per unit of risk. If you would invest 4,760 in Lyxor UCITS Stoxx on September 3, 2024 and sell it today you would earn a total of 410.00 from holding Lyxor UCITS Stoxx or generate 8.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor UCITS Stoxx vs. WisdomTree Europe Equity
Performance |
| Timeline |
| Lyxor UCITS Stoxx |
| WisdomTree Europe Equity |
Lyxor UCITS and WisdomTree Europe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor UCITS and WisdomTree Europe
The main advantage of trading using opposite Lyxor UCITS and WisdomTree Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor UCITS position performs unexpectedly, WisdomTree Europe 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 Europe will offset losses from the drop in WisdomTree Europe's long position.| Lyxor UCITS vs. UBSFund Solutions MSCI | Lyxor UCITS vs. Vanguard SP 500 | Lyxor UCITS vs. iShares VII PLC | Lyxor UCITS vs. iShares Core SP |
| WisdomTree Europe vs. WisdomTree Japan Equity | WisdomTree Europe vs. WisdomTree Emerging Markets | WisdomTree Europe vs. WisdomTree Equity Income | WisdomTree Europe vs. WisdomTree Battery Solutions |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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