Correlation Between Manitou BF and Lyxor Index

Can any of the company-specific risk be diversified away by investing in both Manitou BF and Lyxor Index 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 Index 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 Index Fund, you can compare the effects of market volatilities on Manitou BF and Lyxor Index 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 Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manitou BF and Lyxor Index.

Diversification Opportunities for Manitou BF and Lyxor Index

0.15

Correlation Coefficient

Manitou BF  Lyxor Index

Average diversification

The 3 months correlation between Manitou and Lyxor is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Manitou BF SA and Lyxor Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Index Fund 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 Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Index Fund has no effect on the direction of Manitou BF i.e., Manitou BF and Lyxor Index go up and down completely randomly.

Pair Corralation between Manitou BF and Lyxor Index

Assuming the 90 days trading horizon Manitou BF SA is expected to under-perform the Lyxor Index. In addition to that, Manitou BF is 2.29 times more volatile than Lyxor Index Fund. It trades about -0.09 of its total potential returns per unit of risk. Lyxor Index Fund is currently generating about -0.04 per unit of volatility. If you would invest  7,125  in Lyxor Index Fund on September 5, 2024 and sell it today you would lose (156.00) from holding Lyxor Index Fund or give up 2.19% of portfolio value over 90 days.

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

Manitou BF SA  vs.  Lyxor Index Fund

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 Index Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyxor Index Fund has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Lyxor Index 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 Index

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

The idea behind Manitou BF SA and Lyxor Index Fund 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.