Correlation Between Lyxor 1 and R Co

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

By analyzing existing cross correlation between Lyxor 1 and R co Thematic Silver, you can compare the effects of market volatilities on Lyxor 1 and R Co 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 R Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and R Co.

Diversification Opportunities for Lyxor 1 and R Co

0.03

Correlation Coefficient

Lyxor 1  R Co

Significant diversification

The 3 months correlation between Lyxor and 0P0000PPEZ is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and R co Thematic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on R co Thematic 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 R Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of R co Thematic has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and R Co go up and down completely randomly.

Pair Corralation between Lyxor 1 and R Co

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 1.43 times more return on investment than R Co. However, Lyxor 1 is 1.43 times more volatile than R co Thematic Silver. It trades about -0.03 of its potential returns per unit of risk. R co Thematic Silver is currently generating about -0.06 per unit of risk. If you would invest  2,515  in Lyxor 1 on October 1, 2024 and sell it today you would lose (11.00) from holding Lyxor 1 or give up 0.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Lyxor 1   vs.  R co Thematic Silver

Lyxor 1

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Lyxor 1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

R co Thematic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days R co Thematic Silver has generated negative risk-adjusted returns adding no value to fund investors. Even with relatively invariable basic indicators, R Co is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Lyxor 1 and R Co

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

The idea behind Lyxor 1 and R co Thematic Silver 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.