Correlation Between Microsoft and Lyxor Ibex
Can any of the company-specific risk be diversified away by investing in both Microsoft and Lyxor Ibex 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 Microsoft and Lyxor Ibex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Lyxor Ibex 35, you can compare the effects of market volatilities on Microsoft and Lyxor Ibex 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 Microsoft with a short position of Lyxor Ibex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Lyxor Ibex.
Diversification Opportunities for Microsoft and Lyxor Ibex
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and Lyxor is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Lyxor Ibex 35 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Ibex 35 and Microsoft 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 Microsoft are associated (or correlated) with Lyxor Ibex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Ibex 35 has no effect on the direction of Microsoft i.e., Microsoft and Lyxor Ibex go up and down completely randomly.
Pair Corralation between Microsoft and Lyxor Ibex
Given the investment horizon of 90 days Microsoft is expected to generate 5.81 times less return on investment than Lyxor Ibex. But when comparing it to its historical volatility, Microsoft is 1.37 times less risky than Lyxor Ibex. It trades about 0.01 of its potential returns per unit of risk. Lyxor Ibex 35 is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,681 in Lyxor Ibex 35 on September 3, 2024 and sell it today you would earn a total of 153.00 from holding Lyxor Ibex 35 or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.9% |
| Values | Daily Returns |
Microsoft vs. Lyxor Ibex 35
Performance |
| Timeline |
| Microsoft |
| Lyxor Ibex 35 |
Microsoft and Lyxor Ibex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Lyxor Ibex
The main advantage of trading using opposite Microsoft and Lyxor Ibex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Lyxor Ibex 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 Lyxor Ibex will offset losses from the drop in Lyxor Ibex's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| Lyxor Ibex vs. Lyxor UCITS Ibex35 | Lyxor Ibex vs. Lyxor Ibex 35 | Lyxor Ibex vs. Metrovacesa SA | Lyxor Ibex vs. Endurance Motive SA |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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