Correlation Between WisdomTree Natural and Lyxor Treasury

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

By analyzing existing cross correlation between WisdomTree Natural Gas and Lyxor Treasury 10Y, you can compare the effects of market volatilities on WisdomTree Natural and Lyxor Treasury 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 WisdomTree Natural with a short position of Lyxor Treasury. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Natural and Lyxor Treasury.

Diversification Opportunities for WisdomTree Natural and Lyxor Treasury

-0.32

Correlation Coefficient

WisdomTree Natural  Lyxor Treasury

Very good diversification

The 3 months correlation between WisdomTree and Lyxor is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Natural Gas and Lyxor Treasury 10Y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor Treasury 10Y and WisdomTree Natural 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 WisdomTree Natural Gas are associated (or correlated) with Lyxor Treasury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor Treasury 10Y has no effect on the direction of WisdomTree Natural i.e., WisdomTree Natural and Lyxor Treasury go up and down completely randomly.

Pair Corralation between WisdomTree Natural and Lyxor Treasury

Assuming the 90 days trading horizon WisdomTree Natural Gas is expected to under-perform the Lyxor Treasury. In addition to that, WisdomTree Natural is 10.81 times more volatile than Lyxor Treasury 10Y. It trades about -0.02 of its total potential returns per unit of risk. Lyxor Treasury 10Y is currently generating about 0.0 per unit of volatility. If you would invest  854,100  in Lyxor Treasury 10Y on September 3, 2024 and sell it today you would lose (600.00) from holding Lyxor Treasury 10Y or give up 0.07% of portfolio value over 90 days.

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

WisdomTree Natural Gas  vs.  Lyxor Treasury 10Y

WisdomTree Natural Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree Natural Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Lyxor Treasury 10Y

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyxor Treasury 10Y has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Lyxor Treasury is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with WisdomTree Natural and Lyxor Treasury

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

The idea behind WisdomTree Natural Gas and Lyxor Treasury 10Y 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.