Correlation Between Lyxor 1 and DWS Top

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

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

Diversification Opportunities for Lyxor 1 and DWS Top

0.8

Correlation Coefficient

Lyxor 1  DWS Top

Very poor diversification

The 3 months correlation between Lyxor and DWS is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and DWS Top Dividende in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Top Dividende 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 DWS Top. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Top Dividende has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and DWS Top go up and down completely randomly.

Pair Corralation between Lyxor 1 and DWS Top

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 1.83 times more return on investment than DWS Top. However, Lyxor 1 is 1.83 times more volatile than DWS Top Dividende. It trades about 0.21 of its potential returns per unit of risk. DWS Top Dividende is currently generating about 0.2 per unit of risk. If you would invest  2,485  in Lyxor 1 on December 20, 2024 and sell it today you would earn a total of  311.00  from holding Lyxor 1 or generate 12.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Lyxor 1   vs.  DWS Top Dividende

Lyxor 1

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Lyxor 1 reported solid returns over the last few months and may actually be approaching a breakup point.

DWS Top Dividende

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DWS Top Dividende are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unsteady primary indicators, DWS Top may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Lyxor 1 and DWS Top

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

The idea behind Lyxor 1 and DWS Top Dividende 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 Commodity Directory module to find actively traded commodities issued by global exchanges.