Correlation Between Lyxor 1 and AMADEUS IT

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

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

Diversification Opportunities for Lyxor 1 and AMADEUS IT

0.56

Correlation Coefficient

Lyxor 1  AMADEUS IT

Very weak diversification

The 3 months correlation between Lyxor and AMADEUS is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and AMADEUS IT GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMADEUS IT GRP 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 AMADEUS IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMADEUS IT GRP has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and AMADEUS IT go up and down completely randomly.

Pair Corralation between Lyxor 1 and AMADEUS IT

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 1.36 times less return on investment than AMADEUS IT. But when comparing it to its historical volatility, Lyxor 1 is 1.81 times less risky than AMADEUS IT. It trades about 0.11 of its potential returns per unit of risk. AMADEUS IT GRP is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  6,697  in AMADEUS IT GRP on December 30, 2024 and sell it today you would earn a total of  603.00  from holding AMADEUS IT GRP or generate 9.0% return on investment over 90 days.

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

Lyxor 1   vs.  AMADEUS IT GRP

Lyxor 1

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 8 (%) 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.

AMADEUS IT GRP

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AMADEUS IT GRP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AMADEUS IT may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lyxor 1 and AMADEUS IT

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

The idea behind Lyxor 1 and AMADEUS IT GRP 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.