Correlation Between IShares Govt and LYXOR DAILY

Can any of the company-specific risk be diversified away by investing in both IShares Govt and LYXOR DAILY 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 IShares Govt and LYXOR DAILY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Govt Bond and LYXOR DAILY SHORTDAX, you can compare the effects of market volatilities on IShares Govt and LYXOR DAILY 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 IShares Govt with a short position of LYXOR DAILY. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Govt and LYXOR DAILY.

Diversification Opportunities for IShares Govt and LYXOR DAILY

-0.12

Correlation Coefficient

IShares Govt  LYXOR DAILY

Good diversification

The 3 months correlation between IShares and LYXOR is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding iShares Govt Bond and LYXOR DAILY SHORTDAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYXOR DAILY SHORTDAX and IShares Govt 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 iShares Govt Bond are associated (or correlated) with LYXOR DAILY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYXOR DAILY SHORTDAX has no effect on the direction of IShares Govt i.e., IShares Govt and LYXOR DAILY go up and down completely randomly.

Pair Corralation between IShares Govt and LYXOR DAILY

Assuming the 90 days trading horizon iShares Govt Bond is expected to generate 0.23 times more return on investment than LYXOR DAILY. However, iShares Govt Bond is 4.36 times less risky than LYXOR DAILY. It trades about 0.14 of its potential returns per unit of risk. LYXOR DAILY SHORTDAX is currently generating about -0.06 per unit of risk. If you would invest  15,190  in iShares Govt Bond on September 3, 2024 and sell it today you would earn a total of  547.00  from holding iShares Govt Bond or generate 3.6% return on investment over 90 days.

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

iShares Govt Bond  vs.  LYXOR DAILY SHORTDAX

iShares Govt Bond

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Govt Bond are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IShares Govt is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

LYXOR DAILY SHORTDAX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LYXOR DAILY SHORTDAX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with IShares Govt and LYXOR DAILY

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

The idea behind iShares Govt Bond and LYXOR DAILY SHORTDAX 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.