Correlation Between UST Inc and Lyxor CAC
Can any of the company-specific risk be diversified away by investing in both UST Inc and Lyxor CAC 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 UST Inc and Lyxor CAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Units Luxembourg and Lyxor CAC 40, you can compare the effects of market volatilities on UST Inc and Lyxor CAC 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 UST Inc with a short position of Lyxor CAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of UST Inc and Lyxor CAC.
Diversification Opportunities for UST Inc and Lyxor CAC
Excellent diversification
The 3 months correlation between UST and Lyxor is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Multi Units Luxembourg and Lyxor CAC 40 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor CAC 40 and UST Inc 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 Multi Units Luxembourg are associated (or correlated) with Lyxor CAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor CAC 40 has no effect on the direction of UST Inc i.e., UST Inc and Lyxor CAC go up and down completely randomly.
Pair Corralation between UST Inc and Lyxor CAC
Assuming the 90 days trading horizon Multi Units Luxembourg is expected to generate 1.51 times more return on investment than Lyxor CAC. However, UST Inc is 1.51 times more volatile than Lyxor CAC 40. It trades about 0.14 of its potential returns per unit of risk. Lyxor CAC 40 is currently generating about -0.21 per unit of risk. If you would invest 7,657 in Multi Units Luxembourg on August 30, 2024 and sell it today you would earn a total of 327.00 from holding Multi Units Luxembourg or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Units Luxembourg vs. Lyxor CAC 40
Performance |
| Timeline |
| Multi Units Luxembourg |
| Lyxor CAC 40 |
UST Inc and Lyxor CAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UST Inc and Lyxor CAC
The main advantage of trading using opposite UST Inc and Lyxor CAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UST Inc position performs unexpectedly, Lyxor CAC 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 CAC will offset losses from the drop in Lyxor CAC's long position.| UST Inc vs. Manitou BF SA | UST Inc vs. Ossiam Minimum Variance | UST Inc vs. Ekinops SA | UST Inc vs. Orapi SA |
| Lyxor CAC vs. Manitou BF SA | Lyxor CAC vs. Ossiam Minimum Variance | Lyxor CAC vs. Ekinops SA | Lyxor CAC vs. Orapi SA |
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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