Correlation Between Lyxor 1 and Williams Sonoma

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

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

Diversification Opportunities for Lyxor 1 and Williams Sonoma

0.66

Correlation Coefficient

Lyxor 1  Williams Sonoma

Poor diversification

The 3 months correlation between Lyxor and Williams is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Williams Sonoma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Williams Sonoma 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 Williams Sonoma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Williams Sonoma has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Williams Sonoma go up and down completely randomly.

Pair Corralation between Lyxor 1 and Williams Sonoma

Assuming the 90 days trading horizon Lyxor 1 is expected to under-perform the Williams Sonoma. But the etf apears to be less risky and, when comparing its historical volatility, Lyxor 1 is 3.5 times less risky than Williams Sonoma. The etf trades about -0.33 of its potential returns per unit of risk. The Williams Sonoma is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  17,815  in Williams Sonoma on October 9, 2024 and sell it today you would earn a total of  1,265  from holding Williams Sonoma or generate 7.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.12%
Values	Daily Returns

Lyxor 1   vs.  Williams Sonoma

Lyxor 1

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Lyxor 1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Williams Sonoma

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Williams Sonoma are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Williams Sonoma unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lyxor 1 and Williams Sonoma

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

The idea behind Lyxor 1 and Williams Sonoma 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.