Correlation Between Lyxor 1 and SCOTT TECHNOLOGY

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

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

Diversification Opportunities for Lyxor 1 and SCOTT TECHNOLOGY

-0.51

Correlation Coefficient

Lyxor 1  SCOTT TECHNOLOGY

Excellent diversification

The 3 months correlation between Lyxor and SCOTT is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and SCOTT TECHNOLOGY go up and down completely randomly.

Pair Corralation between Lyxor 1 and SCOTT TECHNOLOGY

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.34 times more return on investment than SCOTT TECHNOLOGY. However, Lyxor 1 is 2.9 times less risky than SCOTT TECHNOLOGY. It trades about 0.31 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.04 per unit of risk. If you would invest  2,414  in Lyxor 1 on November 19, 2024 and sell it today you would earn a total of  340.00  from holding Lyxor 1 or generate 14.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.67%
Values	Daily Returns

Lyxor 1   vs.  SCOTT TECHNOLOGY

Lyxor 1

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 24 (%) 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.

SCOTT TECHNOLOGY

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SCOTT TECHNOLOGY are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, SCOTT TECHNOLOGY is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lyxor 1 and SCOTT TECHNOLOGY

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

The idea behind Lyxor 1 and SCOTT TECHNOLOGY 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.