Correlation Between IShares VII and Lyxor BofAML
Can any of the company-specific risk be diversified away by investing in both IShares VII and Lyxor BofAML 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 IShares VII and Lyxor BofAML into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares VII PLC and Lyxor BofAML USD, you can compare the effects of market volatilities on IShares VII and Lyxor BofAML 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 IShares VII with a short position of Lyxor BofAML. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and Lyxor BofAML.
Diversification Opportunities for IShares VII and Lyxor BofAML
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between IShares and Lyxor is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII PLC and Lyxor BofAML USD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor BofAML USD and IShares VII 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 iShares VII PLC are associated (or correlated) with Lyxor BofAML. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor BofAML USD has no effect on the direction of IShares VII i.e., IShares VII and Lyxor BofAML go up and down completely randomly.
Pair Corralation between IShares VII and Lyxor BofAML
Assuming the 90 days trading horizon iShares VII PLC is expected to generate 3.68 times more return on investment than Lyxor BofAML. However, IShares VII is 3.68 times more volatile than Lyxor BofAML USD. It trades about 0.06 of its potential returns per unit of risk. Lyxor BofAML USD is currently generating about 0.15 per unit of risk. If you would invest 23,660 in iShares VII PLC on August 31, 2024 and sell it today you would earn a total of 265.00 from holding iShares VII PLC or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares VII PLC vs. Lyxor BofAML USD
Performance |
| Timeline |
| iShares VII PLC |
| Lyxor BofAML USD |
IShares VII and Lyxor BofAML Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares VII and Lyxor BofAML
The main advantage of trading using opposite IShares VII and Lyxor BofAML positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares VII position performs unexpectedly, Lyxor BofAML 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 BofAML will offset losses from the drop in Lyxor BofAML's long position.| IShares VII vs. iShares Govt Bond | IShares VII vs. iShares Global AAA AA | IShares VII vs. iShares Smart City | IShares VII vs. iShares Broad High |
| Lyxor BofAML vs. UBS Fund Solutions | Lyxor BofAML vs. Xtrackers II | Lyxor BofAML vs. Xtrackers Nikkei 225 | Lyxor BofAML vs. iShares VII PLC |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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