Correlation Between Xtrackers Nikkei and Lyxor TIPS
Can any of the company-specific risk be diversified away by investing in both Xtrackers Nikkei and Lyxor TIPS 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 Xtrackers Nikkei and Lyxor TIPS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers Nikkei 225 and Lyxor TIPS DR, you can compare the effects of market volatilities on Xtrackers Nikkei and Lyxor TIPS 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 Xtrackers Nikkei with a short position of Lyxor TIPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Nikkei and Lyxor TIPS.
Diversification Opportunities for Xtrackers Nikkei and Lyxor TIPS
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Xtrackers and Lyxor is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Nikkei 225 and Lyxor TIPS DR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor TIPS DR and Xtrackers Nikkei 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 Xtrackers Nikkei 225 are associated (or correlated) with Lyxor TIPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor TIPS DR has no effect on the direction of Xtrackers Nikkei i.e., Xtrackers Nikkei and Lyxor TIPS go up and down completely randomly.
Pair Corralation between Xtrackers Nikkei and Lyxor TIPS
Assuming the 90 days trading horizon Xtrackers Nikkei is expected to generate 8.36 times less return on investment than Lyxor TIPS. In addition to that, Xtrackers Nikkei is 1.99 times more volatile than Lyxor TIPS DR. It trades about 0.01 of its total potential returns per unit of risk. Lyxor TIPS DR is currently generating about 0.23 per unit of volatility. If you would invest 10,339 in Lyxor TIPS DR on August 31, 2024 and sell it today you would earn a total of 278.00 from holding Lyxor TIPS DR or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers Nikkei 225 vs. Lyxor TIPS DR
Performance |
| Timeline |
| Xtrackers Nikkei 225 |
| Lyxor TIPS DR |
Xtrackers Nikkei and Lyxor TIPS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers Nikkei and Lyxor TIPS
The main advantage of trading using opposite Xtrackers Nikkei and Lyxor TIPS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Nikkei position performs unexpectedly, Lyxor TIPS 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 TIPS will offset losses from the drop in Lyxor TIPS's long position.| Xtrackers Nikkei vs. Xtrackers II Global | Xtrackers Nikkei vs. Xtrackers FTSE | Xtrackers Nikkei vs. Xtrackers SP 500 | Xtrackers Nikkei vs. Xtrackers MSCI |
| Lyxor TIPS vs. UBS Fund Solutions | Lyxor TIPS vs. Xtrackers II | Lyxor TIPS vs. Xtrackers Nikkei 225 | Lyxor TIPS 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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