Correlation Between UBSFund Solutions and Lyxor Japan

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

By analyzing existing cross correlation between UBSFund Solutions MSCI and Lyxor Japan UCITS, you can compare the effects of market volatilities on UBSFund Solutions and Lyxor Japan 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 UBSFund Solutions with a short position of Lyxor Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBSFund Solutions and Lyxor Japan.

Diversification Opportunities for UBSFund Solutions and Lyxor Japan

-0.35

Correlation Coefficient

UBSFund Solutions  Lyxor Japan

Very good diversification

The 3 months correlation between UBSFund and Lyxor is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding UBSFund Solutions MSCI and Lyxor Japan UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Japan UCITS and UBSFund Solutions 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 UBSFund Solutions MSCI are associated (or correlated) with Lyxor Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Japan UCITS has no effect on the direction of UBSFund Solutions i.e., UBSFund Solutions and Lyxor Japan go up and down completely randomly.

Pair Corralation between UBSFund Solutions and Lyxor Japan

Assuming the 90 days trading horizon UBSFund Solutions MSCI is expected to generate 0.74 times more return on investment than Lyxor Japan. However, UBSFund Solutions MSCI is 1.35 times less risky than Lyxor Japan. It trades about 0.05 of its potential returns per unit of risk. Lyxor Japan UCITS is currently generating about 0.03 per unit of risk. If you would invest  1,013  in UBSFund Solutions MSCI on October 2, 2024 and sell it today you would earn a total of  111.00  from holding UBSFund Solutions MSCI or generate 10.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

UBSFund Solutions MSCI  vs.  Lyxor Japan UCITS

UBSFund Solutions MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBSFund Solutions MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Lyxor Japan UCITS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor Japan UCITS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Lyxor Japan 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 UBSFund Solutions and Lyxor Japan

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

The idea behind UBSFund Solutions MSCI and Lyxor Japan UCITS 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.