Correlation Between WisdomTree NASDAQ and Lyxor Core
Can any of the company-specific risk be diversified away by investing in both WisdomTree NASDAQ and Lyxor Core 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 WisdomTree NASDAQ and Lyxor Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree NASDAQ 100 and Lyxor Core UK, you can compare the effects of market volatilities on WisdomTree NASDAQ and Lyxor Core 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 WisdomTree NASDAQ with a short position of Lyxor Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree NASDAQ and Lyxor Core.
Diversification Opportunities for WisdomTree NASDAQ and Lyxor Core
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between WisdomTree and Lyxor is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree NASDAQ 100 and Lyxor Core UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Core UK and WisdomTree NASDAQ 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 WisdomTree NASDAQ 100 are associated (or correlated) with Lyxor Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Core UK has no effect on the direction of WisdomTree NASDAQ i.e., WisdomTree NASDAQ and Lyxor Core go up and down completely randomly.
Pair Corralation between WisdomTree NASDAQ and Lyxor Core
Assuming the 90 days trading horizon WisdomTree NASDAQ 100 is expected to generate 6.18 times more return on investment than Lyxor Core. However, WisdomTree NASDAQ is 6.18 times more volatile than Lyxor Core UK. It trades about 0.12 of its potential returns per unit of risk. Lyxor Core UK is currently generating about -0.06 per unit of risk. If you would invest 19,385 in WisdomTree NASDAQ 100 on September 3, 2024 and sell it today you would earn a total of 4,640 from holding WisdomTree NASDAQ 100 or generate 23.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WisdomTree NASDAQ 100 vs. Lyxor Core UK
Performance |
| Timeline |
| WisdomTree NASDAQ 100 |
| Lyxor Core UK |
WisdomTree NASDAQ and Lyxor Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree NASDAQ and Lyxor Core
The main advantage of trading using opposite WisdomTree NASDAQ and Lyxor Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree NASDAQ position performs unexpectedly, Lyxor Core 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 Core will offset losses from the drop in Lyxor Core's long position.| WisdomTree NASDAQ vs. WisdomTree Zinc | WisdomTree NASDAQ vs. WisdomTree Brent Crude | WisdomTree NASDAQ vs. WisdomTree Aluminium 2x | WisdomTree NASDAQ vs. WisdomTree Enhanced Commodity |
| Lyxor Core vs. WisdomTree Natural Gas | Lyxor Core vs. WisdomTree NASDAQ 100 | Lyxor Core vs. WisdomTree Silver 3x | Lyxor Core vs. WisdomTree SP 500 |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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