Correlation Between Lyxor 1 and Boeing

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

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

Diversification Opportunities for Lyxor 1 and Boeing

-0.04

Correlation Coefficient

Lyxor 1  Boeing

Good diversification

The 3 months correlation between Lyxor and Boeing is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and The Boeing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boeing 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 Boeing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boeing has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Boeing go up and down completely randomly.

Pair Corralation between Lyxor 1 and Boeing

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.39 times more return on investment than Boeing. However, Lyxor 1 is 2.56 times less risky than Boeing. It trades about 0.2 of its potential returns per unit of risk. The Boeing is currently generating about -0.03 per unit of risk. If you would invest  2,495  in Lyxor 1 on December 21, 2024 and sell it today you would earn a total of  301.00  from holding Lyxor 1 or generate 12.06% return on investment over 90 days.

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

Lyxor 1   vs.  The Boeing

Lyxor 1

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 15 (%) 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.

Boeing

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Boeing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Boeing is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lyxor 1 and Boeing

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

The idea behind Lyxor 1 and The Boeing 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.