Correlation Between Amundi EUR and LS 1x
Can any of the company-specific risk be diversified away by investing in both Amundi EUR and LS 1x 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 Amundi EUR and LS 1x into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amundi EUR High and LS 1x Amazon, you can compare the effects of market volatilities on Amundi EUR and LS 1x 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 Amundi EUR with a short position of LS 1x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi EUR and LS 1x.
Diversification Opportunities for Amundi EUR and LS 1x
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Amundi and 1AMZ is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Amundi EUR High and LS 1x Amazon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS 1x Amazon and Amundi EUR 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 Amundi EUR High are associated (or correlated) with LS 1x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS 1x Amazon has no effect on the direction of Amundi EUR i.e., Amundi EUR and LS 1x go up and down completely randomly.
Pair Corralation between Amundi EUR and LS 1x
Assuming the 90 days trading horizon Amundi EUR is expected to generate 44.86 times less return on investment than LS 1x. But when comparing it to its historical volatility, Amundi EUR High is 16.25 times less risky than LS 1x. It trades about 0.07 of its potential returns per unit of risk. LS 1x Amazon is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 581.00 in LS 1x Amazon on August 29, 2024 and sell it today you would earn a total of 51.00 from holding LS 1x Amazon or generate 8.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amundi EUR High vs. LS 1x Amazon
Performance |
| Timeline |
| Amundi EUR High |
| LS 1x Amazon |
Amundi EUR and LS 1x Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amundi EUR and LS 1x
The main advantage of trading using opposite Amundi EUR and LS 1x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amundi EUR position performs unexpectedly, LS 1x 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 LS 1x will offset losses from the drop in LS 1x's long position.| Amundi EUR vs. Leverage Shares 2x | Amundi EUR vs. WisdomTree Silver 3x | Amundi EUR vs. Leverage Shares 2x | Amundi EUR vs. WisdomTree SP 500 |
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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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