Correlation Between Vanguard and Lyxor Japan
Can any of the company-specific risk be diversified away by investing in both Vanguard and Lyxor Japan 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 Vanguard and Lyxor Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP 500 and Lyxor Japan UCITS, you can compare the effects of market volatilities on Vanguard and Lyxor Japan 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 Vanguard with a short position of Lyxor Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Lyxor Japan.
Diversification Opportunities for Vanguard and Lyxor Japan
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Lyxor is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and Lyxor Japan UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Japan UCITS and Vanguard 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 Vanguard SP 500 are associated (or correlated) with Lyxor Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Japan UCITS has no effect on the direction of Vanguard i.e., Vanguard and Lyxor Japan go up and down completely randomly.
Pair Corralation between Vanguard and Lyxor Japan
Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 1.46 times more return on investment than Lyxor Japan. However, Vanguard is 1.46 times more volatile than Lyxor Japan UCITS. It trades about 0.16 of its potential returns per unit of risk. Lyxor Japan UCITS is currently generating about 0.19 per unit of risk. If you would invest 10,200 in Vanguard SP 500 on November 3, 2024 and sell it today you would earn a total of 340.00 from holding Vanguard SP 500 or generate 3.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP 500 vs. Lyxor Japan UCITS
Performance |
| Timeline |
| Vanguard SP 500 |
| Lyxor Japan UCITS |
Vanguard and Lyxor Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and Lyxor Japan
The main advantage of trading using opposite Vanguard and Lyxor Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard position performs unexpectedly, Lyxor Japan 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 Japan will offset losses from the drop in Lyxor Japan's long position.| Vanguard vs. Vanguard FTSE Emerging | Vanguard vs. Vanguard USD Emerging | Vanguard vs. Vanguard FTSE Developed | Vanguard vs. Vanguard FTSE Japan |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |