Correlation Between Amundi Index and Lyxor Index

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

Diversification Opportunities for Amundi Index and Lyxor Index

0.69

Correlation Coefficient

Amundi Index  Lyxor Index

Poor diversification

The 3 months correlation between Amundi and Lyxor is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Amundi Index Solutions and Lyxor Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Index Fund 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 Lyxor Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Index Fund has no effect on the direction of Amundi Index i.e., Amundi Index and Lyxor Index go up and down completely randomly.

Pair Corralation between Amundi Index and Lyxor Index

Assuming the 90 days trading horizon Amundi Index Solutions is expected to generate 0.76 times more return on investment than Lyxor Index. However, Amundi Index Solutions is 1.31 times less risky than Lyxor Index. It trades about 0.25 of its potential returns per unit of risk. Lyxor Index Fund is currently generating about 0.07 per unit of risk. If you would invest  51,273  in Amundi Index Solutions on September 4, 2024 and sell it today you would earn a total of  6,608  from holding Amundi Index Solutions or generate 12.89% return on investment over 90 days.

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

Amundi Index Solutions  vs.  Lyxor Index Fund

Amundi Index Solutions

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Index Solutions are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amundi Index may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lyxor Index Fund

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor Index Fund are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward-looking signals, Lyxor Index is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amundi Index and Lyxor Index

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

The idea behind Amundi Index Solutions and Lyxor Index Fund 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.