Correlation Between Multi Units and Lyxor MSCI

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

By analyzing existing cross correlation between Multi Units Luxembourg and Lyxor MSCI World, you can compare the effects of market volatilities on Multi Units and Lyxor MSCI 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 MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Units and Lyxor MSCI.

Diversification Opportunities for Multi Units and Lyxor MSCI

-0.74

Correlation Coefficient

Multi Units  Lyxor MSCI

Pay attention - limited upside

The 3 months correlation between Multi and Lyxor is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Multi Units Luxembourg and Lyxor MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor MSCI World 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 Luxembourg are associated (or correlated) with Lyxor MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor MSCI World has no effect on the direction of Multi Units i.e., Multi Units and Lyxor MSCI go up and down completely randomly.

Pair Corralation between Multi Units and Lyxor MSCI

Assuming the 90 days trading horizon Multi Units Luxembourg is expected to generate 0.02 times more return on investment than Lyxor MSCI. However, Multi Units Luxembourg is 44.34 times less risky than Lyxor MSCI. It trades about 0.46 of its potential returns per unit of risk. Lyxor MSCI World is currently generating about -0.09 per unit of risk. If you would invest  122,571  in Multi Units Luxembourg on December 28, 2024 and sell it today you would earn a total of  1,361  from holding Multi Units Luxembourg or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Multi Units Luxembourg  vs.  Lyxor MSCI World

Multi Units Luxembourg

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Units Luxembourg are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Multi Units is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Lyxor MSCI World

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lyxor MSCI World has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Multi Units and Lyxor MSCI

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

The idea behind Multi Units Luxembourg and Lyxor MSCI World 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.