Correlation Between Manitou BF and Lyxor CAC

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

By analyzing existing cross correlation between Manitou BF SA and Lyxor CAC 40, you can compare the effects of market volatilities on Manitou BF and Lyxor CAC 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 Manitou BF with a short position of Lyxor CAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manitou BF and Lyxor CAC.

Diversification Opportunities for Manitou BF and Lyxor CAC

0.67

Correlation Coefficient

Manitou BF  Lyxor CAC

Poor diversification

The 3 months correlation between Manitou and Lyxor is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Manitou BF SA and Lyxor CAC 40 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor CAC 40 and Manitou BF 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 Manitou BF SA are associated (or correlated) with Lyxor CAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor CAC 40 has no effect on the direction of Manitou BF i.e., Manitou BF and Lyxor CAC go up and down completely randomly.

Pair Corralation between Manitou BF and Lyxor CAC

Assuming the 90 days trading horizon Manitou BF SA is expected to under-perform the Lyxor CAC. In addition to that, Manitou BF is 2.13 times more volatile than Lyxor CAC 40. It trades about -0.1 of its total potential returns per unit of risk. Lyxor CAC 40 is currently generating about -0.05 per unit of volatility. If you would invest  3,595  in Lyxor CAC 40 on September 4, 2024 and sell it today you would lose (122.00) from holding Lyxor CAC 40 or give up 3.39% of portfolio value over 90 days.

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

Manitou BF SA  vs.  Lyxor CAC 40

Manitou BF SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lyxor CAC 40

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyxor CAC 40 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lyxor CAC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Manitou BF and Lyxor CAC

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

The idea behind Manitou BF SA and Lyxor CAC 40 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.