Correlation Between Lyxor PEA and Multi Units
Can any of the company-specific risk be diversified away by investing in both Lyxor PEA and Multi Units 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 PEA and Multi Units into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor PEA Nasdaq and Multi Units Luxembourg, you can compare the effects of market volatilities on Lyxor PEA and Multi Units 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 PEA with a short position of Multi Units. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor PEA and Multi Units.
Diversification Opportunities for Lyxor PEA and Multi Units
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Lyxor and Multi is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor PEA Nasdaq and Multi Units Luxembourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units Luxembourg and Lyxor PEA 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 PEA Nasdaq are associated (or correlated) with Multi Units. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units Luxembourg has no effect on the direction of Lyxor PEA i.e., Lyxor PEA and Multi Units go up and down completely randomly.
Pair Corralation between Lyxor PEA and Multi Units
Assuming the 90 days trading horizon Lyxor PEA Nasdaq is expected to generate 1.39 times more return on investment than Multi Units. However, Lyxor PEA is 1.39 times more volatile than Multi Units Luxembourg. It trades about 0.11 of its potential returns per unit of risk. Multi Units Luxembourg is currently generating about 0.12 per unit of risk. If you would invest 4,378 in Lyxor PEA Nasdaq on August 29, 2024 and sell it today you would earn a total of 3,618 from holding Lyxor PEA Nasdaq or generate 82.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor PEA Nasdaq vs. Multi Units Luxembourg
Performance |
| Timeline |
| Lyxor PEA Nasdaq |
| Multi Units Luxembourg |
Lyxor PEA and Multi Units Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor PEA and Multi Units
The main advantage of trading using opposite Lyxor PEA and Multi Units positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor PEA position performs unexpectedly, Multi Units 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 Multi Units will offset losses from the drop in Multi Units' long position.| Lyxor PEA vs. Lyxor SP 500 | Lyxor PEA vs. Lyxor UCITS Daily | Lyxor PEA vs. Lyxor UCITS MSCI | Lyxor PEA vs. Lyxor Treasury 10Y |
| Multi Units vs. Multi Units Luxembourg | Multi Units vs. Multi Units Luxembourg | Multi Units vs. Multi Units France | Multi Units vs. Multi Units Luxembourg |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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