Correlation Between Lyxor Index and Lyxor PEA
Can any of the company-specific risk be diversified away by investing in both Lyxor Index and Lyxor PEA 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 Index and Lyxor PEA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor Index Fund and Lyxor PEA SP, you can compare the effects of market volatilities on Lyxor Index and Lyxor PEA 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 Index with a short position of Lyxor PEA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor Index and Lyxor PEA.
Diversification Opportunities for Lyxor Index and Lyxor PEA
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lyxor and Lyxor is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor Index Fund and Lyxor PEA SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor PEA SP and Lyxor Index 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 Index Fund are associated (or correlated) with Lyxor PEA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor PEA SP has no effect on the direction of Lyxor Index i.e., Lyxor Index and Lyxor PEA go up and down completely randomly.
Pair Corralation between Lyxor Index and Lyxor PEA
Assuming the 90 days trading horizon Lyxor Index is expected to generate 9.03 times less return on investment than Lyxor PEA. But when comparing it to its historical volatility, Lyxor Index Fund is 1.13 times less risky than Lyxor PEA. It trades about 0.04 of its potential returns per unit of risk. Lyxor PEA SP is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 4,569 in Lyxor PEA SP on September 1, 2024 and sell it today you would earn a total of 389.00 from holding Lyxor PEA SP or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor Index Fund vs. Lyxor PEA SP
Performance |
| Timeline |
| Lyxor Index Fund |
| Lyxor PEA SP |
Lyxor Index and Lyxor PEA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor Index and Lyxor PEA
The main advantage of trading using opposite Lyxor Index and Lyxor PEA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor Index position performs unexpectedly, Lyxor PEA 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 PEA will offset losses from the drop in Lyxor PEA's long position.| Lyxor Index vs. Multi Units France | Lyxor Index vs. Lyxor MSCI China | Lyxor Index vs. Manitou BF SA | Lyxor Index vs. Ossiam Minimum Variance |
| Lyxor PEA vs. Amundi Index Solutions | Lyxor PEA vs. Lyxor PEA Nasdaq | Lyxor PEA vs. Amundi Index Solutions | Lyxor PEA vs. Amundi ETF PEA |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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