Correlation Between Lyxor 1 and SILICON LABORATOR

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

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

Diversification Opportunities for Lyxor 1 and SILICON LABORATOR

0.47

Correlation Coefficient

Lyxor 1  SILICON LABORATOR

Very weak diversification

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

Pair Corralation between Lyxor 1 and SILICON LABORATOR

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.36 times more return on investment than SILICON LABORATOR. However, Lyxor 1 is 2.75 times less risky than SILICON LABORATOR. It trades about 0.15 of its potential returns per unit of risk. SILICON LABORATOR is currently generating about -0.01 per unit of risk. If you would invest  2,495  in Lyxor 1 on December 23, 2024 and sell it today you would earn a total of  230.00  from holding Lyxor 1 or generate 9.22% 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.  SILICON LABORATOR

Lyxor 1

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 11 (%) 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.

SILICON LABORATOR

Risk-Adjusted Performance

Very Weak

Over the last 90 days SILICON LABORATOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SILICON LABORATOR 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 SILICON LABORATOR

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

The idea behind Lyxor 1 and SILICON LABORATOR 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.