Correlation Between Nasdaq and Lyxor UCITS

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

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

Diversification Opportunities for Nasdaq and Lyxor UCITS

-0.66

Correlation Coefficient

Nasdaq  Lyxor UCITS

Excellent diversification

The 3 months correlation between Nasdaq and Lyxor is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Lyxor UCITS Stoxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor UCITS Stoxx and Nasdaq 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 Nasdaq Inc 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 Stoxx has no effect on the direction of Nasdaq i.e., Nasdaq and Lyxor UCITS go up and down completely randomly.

Pair Corralation between Nasdaq and Lyxor UCITS

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.61 times more return on investment than Lyxor UCITS. However, Nasdaq Inc is 1.63 times less risky than Lyxor UCITS. It trades about 0.18 of its potential returns per unit of risk. Lyxor UCITS Stoxx is currently generating about -0.01 per unit of risk. If you would invest  5,842  in Nasdaq Inc on September 28, 2024 and sell it today you would earn a total of  2,000  from holding Nasdaq Inc or generate 34.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.99%
Values	Daily Returns

Nasdaq Inc  vs.  Lyxor UCITS Stoxx

Nasdaq Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lyxor UCITS Stoxx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyxor UCITS Stoxx 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 Nasdaq and Lyxor UCITS

The main advantage of trading using opposite Nasdaq and Lyxor UCITS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc and Lyxor UCITS Stoxx 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.