Correlation Between Amundi Index and LS 1x

Can any of the company-specific risk be diversified away by investing in both Amundi Index 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 Index 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 Index Solutions and LS 1x Amazon, you can compare the effects of market volatilities on Amundi Index 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 Index with a short position of LS 1x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi Index and LS 1x.

Diversification Opportunities for Amundi Index and LS 1x

0.06

Correlation Coefficient

Amundi Index  LS 1x

Significant diversification

The 3 months correlation between Amundi and 1AMZ is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Amundi Index Solutions 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 Index 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 Index Solutions 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 Index i.e., Amundi Index and LS 1x go up and down completely randomly.

Pair Corralation between Amundi Index and LS 1x

Assuming the 90 days trading horizon Amundi Index Solutions is expected to generate 0.6 times more return on investment than LS 1x. However, Amundi Index Solutions is 1.68 times less risky than LS 1x. It trades about 0.01 of its potential returns per unit of risk. LS 1x Amazon is currently generating about 0.0 per unit of risk. If you would invest  4,041  in Amundi Index Solutions on December 1, 2024 and sell it today you would lose (1.00) from holding Amundi Index Solutions or give up 0.02% of portfolio value over 90 days.

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

Amundi Index Solutions  vs.  LS 1x Amazon

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.

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 comparatively stable basic indicators, LS 1x 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 Amundi Index and LS 1x

The main advantage of trading using opposite Amundi Index and LS 1x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amundi Index 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.

The idea behind Amundi Index Solutions and LS 1x Amazon 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.