Correlation Between Armada Hflr and Lyxor PEA

Can any of the company-specific risk be diversified away by investing in both Armada Hflr and Lyxor PEA 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 PEA 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 PEA Nasdaq, you can compare the effects of market volatilities on Armada Hflr and Lyxor PEA 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 PEA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Lyxor PEA.

Diversification Opportunities for Armada Hflr and Lyxor PEA

-0.4

Correlation Coefficient

Armada Hflr  Lyxor PEA

Very good diversification

The 3 months correlation between Armada and Lyxor is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Lyxor PEA Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor PEA Nasdaq 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 PEA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor PEA Nasdaq has no effect on the direction of Armada Hflr i.e., Armada Hflr and Lyxor PEA go up and down completely randomly.

Pair Corralation between Armada Hflr and Lyxor PEA

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Lyxor PEA. In addition to that, Armada Hflr is 1.32 times more volatile than Lyxor PEA Nasdaq. It trades about -0.26 of its total potential returns per unit of risk. Lyxor PEA Nasdaq is currently generating about 0.2 per unit of volatility. If you would invest  7,996  in Lyxor PEA Nasdaq on September 27, 2024 and sell it today you would earn a total of  321.00  from holding Lyxor PEA Nasdaq or generate 4.01% return on investment over 90 days.

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

Armada Hflr Pr  vs.  Lyxor PEA Nasdaq

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Lyxor PEA Nasdaq

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor PEA Nasdaq are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lyxor PEA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Armada Hflr and Lyxor PEA

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

The idea behind Armada Hflr Pr and Lyxor PEA Nasdaq 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.