Correlation Between Multi Units and Lyxor UCITS

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

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

Diversification Opportunities for Multi Units and Lyxor UCITS

0.52

Correlation Coefficient

Multi Units  Lyxor UCITS

Very weak diversification

The 3 months correlation between Multi and Lyxor is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Multi Units France and Lyxor UCITS Dow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor UCITS Dow and Multi Units 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 Multi Units France are associated (or correlated) with Lyxor UCITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor UCITS Dow has no effect on the direction of Multi Units i.e., Multi Units and Lyxor UCITS go up and down completely randomly.

Pair Corralation between Multi Units and Lyxor UCITS

Assuming the 90 days trading horizon Multi Units France is expected to under-perform the Lyxor UCITS. In addition to that, Multi Units is 1.1 times more volatile than Lyxor UCITS Dow. It trades about -0.1 of its total potential returns per unit of risk. Lyxor UCITS Dow is currently generating about -0.09 per unit of volatility. If you would invest  41,215  in Lyxor UCITS Dow on December 29, 2024 and sell it today you would lose (2,480) from holding Lyxor UCITS Dow or give up 6.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Multi Units France  vs.  Lyxor UCITS Dow

Multi Units France

Risk-Adjusted Performance

Very Weak

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

Lyxor UCITS Dow

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lyxor UCITS Dow has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Lyxor UCITS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Multi Units and Lyxor UCITS

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

The idea behind Multi Units France and Lyxor UCITS Dow 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.