Correlation Between LS 1x and Amundi Index

Can any of the company-specific risk be diversified away by investing in both LS 1x and Amundi Index 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 LS 1x and Amundi Index into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LS 1x Amazon and Amundi Index Solutions, you can compare the effects of market volatilities on LS 1x and Amundi Index 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 LS 1x with a short position of Amundi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS 1x and Amundi Index.

Diversification Opportunities for LS 1x and Amundi Index

0.22

Correlation Coefficient

LS 1x  Amundi Index

Modest diversification

The 3 months correlation between 1AMZ and Amundi is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding LS 1x Amazon and Amundi Index Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Index Solutions and LS 1x 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 LS 1x Amazon are associated (or correlated) with Amundi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Index Solutions has no effect on the direction of LS 1x i.e., LS 1x and Amundi Index go up and down completely randomly.

Pair Corralation between LS 1x and Amundi Index

Assuming the 90 days trading horizon LS 1x Amazon is expected to under-perform the Amundi Index. In addition to that, LS 1x is 2.17 times more volatile than Amundi Index Solutions. It trades about -0.09 of its total potential returns per unit of risk. Amundi Index Solutions is currently generating about 0.0 per unit of volatility. If you would invest  318,125  in Amundi Index Solutions on December 30, 2024 and sell it today you would lose (600.00) from holding Amundi Index Solutions or give up 0.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

LS 1x Amazon  vs.  Amundi Index Solutions

LS 1x Amazon

Risk-Adjusted Performance

Very Weak

Over the last 90 days LS 1x Amazon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Amundi Index Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amundi Index Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Amundi Index is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with LS 1x and Amundi Index

The main advantage of trading using opposite LS 1x and Amundi Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS 1x position performs unexpectedly, Amundi Index 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 Amundi Index will offset losses from the drop in Amundi Index's long position.

The idea behind LS 1x Amazon and Amundi Index Solutions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.