Correlation Between Lyxor 1 and AYR WELLNESS

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Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and AYR WELLNESS 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 AYR WELLNESS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and AYR WELLNESS INCRESVTG, you can compare the effects of market volatilities on Lyxor 1 and AYR WELLNESS 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 AYR WELLNESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and AYR WELLNESS.

Diversification Opportunities for Lyxor 1 and AYR WELLNESS

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between Lyxor and AYR is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and AYR WELLNESS INCRESVTG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AYR WELLNESS INCRESVTG 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 AYR WELLNESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AYR WELLNESS INCRESVTG has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and AYR WELLNESS go up and down completely randomly.

Pair Corralation between Lyxor 1 and AYR WELLNESS

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 12.53 times less return on investment than AYR WELLNESS. But when comparing it to its historical volatility, Lyxor 1 is 8.47 times less risky than AYR WELLNESS. It trades about 0.01 of its potential returns per unit of risk. AYR WELLNESS INCRESVTG is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  113.00  in AYR WELLNESS INCRESVTG on October 10, 2024 and sell it today you would lose (64.00) from holding AYR WELLNESS INCRESVTG or give up 56.64% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy99.6%
ValuesDaily Returns

Lyxor 1   vs.  AYR WELLNESS INCRESVTG

 Performance 
       Timeline  
Lyxor 1 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 2 (%) 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.
AYR WELLNESS INCRESVTG 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AYR WELLNESS INCRESVTG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Lyxor 1 and AYR WELLNESS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lyxor 1 and AYR WELLNESS

The main advantage of trading using opposite Lyxor 1 and AYR WELLNESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, AYR WELLNESS 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 AYR WELLNESS will offset losses from the drop in AYR WELLNESS's long position.
The idea behind Lyxor 1 and AYR WELLNESS INCRESVTG 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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