Correlation Between Lyxor 1 and GREEN PLAINS

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

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

Diversification Opportunities for Lyxor 1 and GREEN PLAINS

-0.49

Correlation Coefficient

Lyxor 1  GREEN PLAINS

Very good diversification

The 3 months correlation between Lyxor and GREEN is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and GREEN PLAINS RENEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREEN PLAINS RENEW 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 GREEN PLAINS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREEN PLAINS RENEW has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and GREEN PLAINS go up and down completely randomly.

Pair Corralation between Lyxor 1 and GREEN PLAINS

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 1.24 times less return on investment than GREEN PLAINS. But when comparing it to its historical volatility, Lyxor 1 is 3.3 times less risky than GREEN PLAINS. It trades about 0.4 of its potential returns per unit of risk. GREEN PLAINS RENEW is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  894.00  in GREEN PLAINS RENEW on October 25, 2024 and sell it today you would earn a total of  64.00  from holding GREEN PLAINS RENEW or generate 7.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Lyxor 1   vs.  GREEN PLAINS RENEW

Lyxor 1

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 10 (%) 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 February 2025.

GREEN PLAINS RENEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GREEN PLAINS RENEW has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GREEN PLAINS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lyxor 1 and GREEN PLAINS

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

The idea behind Lyxor 1 and GREEN PLAINS RENEW 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.