Correlation Between Lyxor UCITS and PIMCO Short
Can any of the company-specific risk be diversified away by investing in both Lyxor UCITS and PIMCO Short 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 PIMCO Short 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 PIMCO Short Term High, you can compare the effects of market volatilities on Lyxor UCITS and PIMCO Short 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 PIMCO Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor UCITS and PIMCO Short.
Diversification Opportunities for Lyxor UCITS and PIMCO Short
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lyxor and PIMCO is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor UCITS Stoxx and PIMCO Short Term High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PIMCO Short Term 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 PIMCO Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PIMCO Short Term has no effect on the direction of Lyxor UCITS i.e., Lyxor UCITS and PIMCO Short go up and down completely randomly.
Pair Corralation between Lyxor UCITS and PIMCO Short
Assuming the 90 days trading horizon Lyxor UCITS Stoxx is expected to generate 0.35 times more return on investment than PIMCO Short. However, Lyxor UCITS Stoxx is 2.9 times less risky than PIMCO Short. It trades about 0.06 of its potential returns per unit of risk. PIMCO Short Term High is currently generating about 0.02 per unit of risk. If you would invest 4,018 in Lyxor UCITS Stoxx on September 1, 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 | Insignificant |
| Accuracy | 72.03% |
| Values | Daily Returns |
Lyxor UCITS Stoxx vs. PIMCO Short Term High
Performance |
| Timeline |
| Lyxor UCITS Stoxx |
| PIMCO Short Term |
Lyxor UCITS and PIMCO Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor UCITS and PIMCO Short
The main advantage of trading using opposite Lyxor UCITS and PIMCO Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor UCITS position performs unexpectedly, PIMCO Short 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 PIMCO Short will offset losses from the drop in PIMCO Short's long position.The idea behind Lyxor UCITS Stoxx and PIMCO Short Term High 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.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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