Correlation Between Lyxor 1 and Amundi Label

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

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

Diversification Opportunities for Lyxor 1 and Amundi Label

0.88

Correlation Coefficient

Lyxor 1  Amundi Label

Very poor diversification

The 3 months correlation between Lyxor and Amundi is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Amundi Label Equilibre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi Label Equilibre and Lyxor 1 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 Lyxor 1 are associated (or correlated) with Amundi Label. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi Label Equilibre has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Amundi Label go up and down completely randomly.

Pair Corralation between Lyxor 1 and Amundi Label

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 2.29 times more return on investment than Amundi Label. However, Lyxor 1 is 2.29 times more volatile than Amundi Label Equilibre. It trades about 0.15 of its potential returns per unit of risk. Amundi Label Equilibre is currently generating about 0.16 per unit of risk. If you would invest  2,504  in Lyxor 1 on December 25, 2024 and sell it today you would earn a total of  221.00  from holding Lyxor 1 or generate 8.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Lyxor 1   vs.  Amundi Label Equilibre

Lyxor 1

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Lyxor 1 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Amundi Label Equilibre

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi Label Equilibre are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Amundi Label is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Lyxor 1 and Amundi Label

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

The idea behind Lyxor 1 and Amundi Label Equilibre 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.