Correlation Between Lyxor Japan and IShares VII
Can any of the company-specific risk be diversified away by investing in both Lyxor Japan and IShares VII 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 Japan and IShares VII into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor Japan UCITS and iShares VII PLC, you can compare the effects of market volatilities on Lyxor Japan and IShares VII 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 Japan with a short position of IShares VII. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor Japan and IShares VII.
Diversification Opportunities for Lyxor Japan and IShares VII
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lyxor and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor Japan UCITS and iShares VII PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares VII PLC and Lyxor Japan 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 Japan UCITS are associated (or correlated) with IShares VII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares VII PLC has no effect on the direction of Lyxor Japan i.e., Lyxor Japan and IShares VII go up and down completely randomly.
Pair Corralation between Lyxor Japan and IShares VII
Assuming the 90 days trading horizon Lyxor Japan is expected to generate 1.07 times less return on investment than IShares VII. But when comparing it to its historical volatility, Lyxor Japan UCITS is 1.14 times less risky than IShares VII. It trades about 0.12 of its potential returns per unit of risk. iShares VII PLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,660,000 in iShares VII PLC on September 12, 2024 and sell it today you would earn a total of 292,500 from holding iShares VII PLC or generate 7.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Lyxor Japan UCITS vs. iShares VII PLC
Performance |
Timeline |
Lyxor Japan UCITS |
iShares VII PLC |
Lyxor Japan and IShares VII Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lyxor Japan and IShares VII
The main advantage of trading using opposite Lyxor Japan and IShares VII positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor Japan position performs unexpectedly, IShares VII 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 IShares VII will offset losses from the drop in IShares VII's long position.Lyxor Japan vs. Lyxor Japan UCITS | Lyxor Japan vs. Lyxor Euro Government | Lyxor Japan vs. Lyxor MSCI China |
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Check out your portfolio center.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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