Correlation Between Invesco Technology and Lyxor Nasdaq
Can any of the company-specific risk be diversified away by investing in both Invesco Technology and Lyxor Nasdaq 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 Invesco Technology and Lyxor Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Technology SP and Lyxor Nasdaq 100, you can compare the effects of market volatilities on Invesco Technology and Lyxor Nasdaq 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 Invesco Technology with a short position of Lyxor Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Technology and Lyxor Nasdaq.
Diversification Opportunities for Invesco Technology and Lyxor Nasdaq
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Invesco and Lyxor is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Technology SP and Lyxor Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Nasdaq 100 and Invesco Technology 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 Invesco Technology SP are associated (or correlated) with Lyxor Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Nasdaq 100 has no effect on the direction of Invesco Technology i.e., Invesco Technology and Lyxor Nasdaq go up and down completely randomly.
Pair Corralation between Invesco Technology and Lyxor Nasdaq
Assuming the 90 days trading horizon Invesco Technology is expected to generate 1.29 times less return on investment than Lyxor Nasdaq. But when comparing it to its historical volatility, Invesco Technology SP is 1.07 times less risky than Lyxor Nasdaq. It trades about 0.37 of its potential returns per unit of risk. Lyxor Nasdaq 100 is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 19,223 in Lyxor Nasdaq 100 on September 19, 2024 and sell it today you would earn a total of 1,492 from holding Lyxor Nasdaq 100 or generate 7.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Invesco Technology SP vs. Lyxor Nasdaq 100
Performance |
| Timeline |
| Invesco Technology |
| Lyxor Nasdaq 100 |
Invesco Technology and Lyxor Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Technology and Lyxor Nasdaq
The main advantage of trading using opposite Invesco Technology and Lyxor Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Technology position performs unexpectedly, Lyxor Nasdaq 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 Nasdaq will offset losses from the drop in Lyxor Nasdaq's long position.| Invesco Technology vs. Baloise Holding AG | Invesco Technology vs. 21Shares Polkadot ETP | Invesco Technology vs. UBS ETF MSCI | Invesco Technology vs. BB Biotech AG |
| Lyxor Nasdaq vs. Lyxor Japan UCITS | Lyxor Nasdaq vs. Lyxor Euro Government | Lyxor Nasdaq vs. Lyxor MSCI China |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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