Correlation Between Lyxor Smart and Lyxor Core
Can any of the company-specific risk be diversified away by investing in both Lyxor Smart 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 Lyxor Smart and Lyxor Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor Smart Overnight and Lyxor Core Equity, you can compare the effects of market volatilities on Lyxor Smart 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 Lyxor Smart with a short position of Lyxor Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor Smart and Lyxor Core.
Diversification Opportunities for Lyxor Smart and Lyxor Core
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lyxor and Lyxor is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor Smart Overnight and Lyxor Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Core Equity and Lyxor Smart 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 Smart Overnight 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 Equity has no effect on the direction of Lyxor Smart i.e., Lyxor Smart and Lyxor Core go up and down completely randomly.
Pair Corralation between Lyxor Smart and Lyxor Core
Assuming the 90 days trading horizon Lyxor Smart is expected to generate 6.79 times less return on investment than Lyxor Core. But when comparing it to its historical volatility, Lyxor Smart Overnight is 22.27 times less risky than Lyxor Core. It trades about 0.6 of its potential returns per unit of risk. Lyxor Core Equity is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,007 in Lyxor Core Equity on September 3, 2024 and sell it today you would earn a total of 182.00 from holding Lyxor Core Equity or generate 9.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor Smart Overnight vs. Lyxor Core Equity
Performance |
| Timeline |
| Lyxor Smart Overnight |
| Lyxor Core Equity |
Lyxor Smart and Lyxor Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor Smart and Lyxor Core
The main advantage of trading using opposite Lyxor Smart and Lyxor Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor Smart 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.| Lyxor Smart vs. Lyxor UCITS EuroMTS | Lyxor Smart vs. Lyxor Core UK | Lyxor Smart vs. Lyxor Core Global | Lyxor Smart vs. Lyxor UCITS iBoxx |
| Lyxor Core vs. Lyxor Smart Overnight | Lyxor Core vs. Lyxor UCITS EuroMTS | Lyxor Core vs. Lyxor Core UK | Lyxor Core vs. Lyxor Core Global |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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