Correlation Between Lyxor MSCI and WisdomTree Natural
Can any of the company-specific risk be diversified away by investing in both Lyxor MSCI and WisdomTree Natural 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 MSCI and WisdomTree Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor MSCI World and WisdomTree Natural Gas, you can compare the effects of market volatilities on Lyxor MSCI and WisdomTree Natural 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 MSCI with a short position of WisdomTree Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor MSCI and WisdomTree Natural.
Diversification Opportunities for Lyxor MSCI and WisdomTree Natural
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lyxor and WisdomTree is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor MSCI World and WisdomTree Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Natural Gas and Lyxor MSCI 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 MSCI World are associated (or correlated) with WisdomTree Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Natural Gas has no effect on the direction of Lyxor MSCI i.e., Lyxor MSCI and WisdomTree Natural go up and down completely randomly.
Pair Corralation between Lyxor MSCI and WisdomTree Natural
Assuming the 90 days trading horizon Lyxor MSCI World is expected to generate 0.4 times more return on investment than WisdomTree Natural. However, Lyxor MSCI World is 2.48 times less risky than WisdomTree Natural. It trades about 0.1 of its potential returns per unit of risk. WisdomTree Natural Gas is currently generating about -0.1 per unit of risk. If you would invest 49,459 in Lyxor MSCI World on September 4, 2024 and sell it today you would earn a total of 41,902 from holding Lyxor MSCI World or generate 84.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor MSCI World vs. WisdomTree Natural Gas
Performance |
| Timeline |
| Lyxor MSCI World |
| WisdomTree Natural Gas |
Lyxor MSCI and WisdomTree Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor MSCI and WisdomTree Natural
The main advantage of trading using opposite Lyxor MSCI and WisdomTree Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor MSCI position performs unexpectedly, WisdomTree Natural 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 WisdomTree Natural will offset losses from the drop in WisdomTree Natural's long position.| Lyxor MSCI vs. Vanguard FTSE Developed | Lyxor MSCI vs. Leverage Shares 2x | Lyxor MSCI vs. Amundi Index Solutions | Lyxor MSCI vs. Amundi Index Solutions |
| WisdomTree Natural vs. Leverage Shares 3x | WisdomTree Natural vs. Leverage Shares 3x | WisdomTree Natural vs. Leverage Shares 3x | WisdomTree Natural vs. GraniteShares 3x Short |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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