Correlation Between Armada Hflr and Lyxor UCITS

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Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Lyxor UCITS 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 Armada Hflr and Lyxor UCITS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armada Hflr Pr and Lyxor UCITS Stoxx, you can compare the effects of market volatilities on Armada Hflr and Lyxor UCITS 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 Armada Hflr with a short position of Lyxor UCITS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Lyxor UCITS.

Diversification Opportunities for Armada Hflr and Lyxor UCITS

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Armada and Lyxor is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Lyxor UCITS Stoxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor UCITS Stoxx and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Lyxor UCITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor UCITS Stoxx has no effect on the direction of Armada Hflr i.e., Armada Hflr and Lyxor UCITS go up and down completely randomly.

Pair Corralation between Armada Hflr and Lyxor UCITS

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Lyxor UCITS. But the stock apears to be less risky and, when comparing its historical volatility, Armada Hflr Pr is 1.28 times less risky than Lyxor UCITS. The stock trades about -0.02 of its potential returns per unit of risk. The Lyxor UCITS Stoxx is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  5,369  in Lyxor UCITS Stoxx on September 28, 2024 and sell it today you would lose (190.00) from holding Lyxor UCITS Stoxx or give up 3.54% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.44%
ValuesDaily Returns

Armada Hflr Pr  vs.  Lyxor UCITS Stoxx

 Performance 
       Timeline  
Armada Hflr Pr 

Risk-Adjusted Performance

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Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.
Lyxor UCITS Stoxx 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Lyxor UCITS Stoxx has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Lyxor UCITS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Armada Hflr and Lyxor UCITS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Armada Hflr and Lyxor UCITS

The main advantage of trading using opposite Armada Hflr and Lyxor UCITS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, Lyxor UCITS 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 UCITS will offset losses from the drop in Lyxor UCITS's long position.
The idea behind Armada Hflr Pr and Lyxor UCITS Stoxx 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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