Correlation Between Lyxor 1 and ALLIANZ TECHNOTRLS-025

Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and ALLIANZ TECHNOTRLS-025 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 Lyxor 1 and ALLIANZ TECHNOTRLS-025 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lyxor 1 and ALLIANZ TECHNOTRLS 025, you can compare the effects of market volatilities on Lyxor 1 and ALLIANZ TECHNOTRLS-025 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 Lyxor 1 with a short position of ALLIANZ TECHNOTRLS-025. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and ALLIANZ TECHNOTRLS-025.

Diversification Opportunities for Lyxor 1 and ALLIANZ TECHNOTRLS-025

0.63

Correlation Coefficient

Lyxor 1  ALLIANZ TECHNOTRLS-025

Poor diversification

The 3 months correlation between Lyxor and ALLIANZ is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and ALLIANZ TECHNOTRLS 025 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLIANZ TECHNOTRLS 025 and Lyxor 1 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 Lyxor 1 are associated (or correlated) with ALLIANZ TECHNOTRLS-025. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLIANZ TECHNOTRLS 025 has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and ALLIANZ TECHNOTRLS-025 go up and down completely randomly.

Pair Corralation between Lyxor 1 and ALLIANZ TECHNOTRLS-025

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 3.72 times less return on investment than ALLIANZ TECHNOTRLS-025. But when comparing it to its historical volatility, Lyxor 1 is 1.69 times less risky than ALLIANZ TECHNOTRLS-025. It trades about 0.09 of its potential returns per unit of risk. ALLIANZ TECHNOTRLS 025 is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  398.00  in ALLIANZ TECHNOTRLS 025 on September 4, 2024 and sell it today you would earn a total of  80.00  from holding ALLIANZ TECHNOTRLS 025 or generate 20.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Lyxor 1   vs.  ALLIANZ TECHNOTRLS 025

Lyxor 1

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Lyxor 1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

ALLIANZ TECHNOTRLS 025

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ALLIANZ TECHNOTRLS 025 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ALLIANZ TECHNOTRLS-025 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lyxor 1 and ALLIANZ TECHNOTRLS-025

The main advantage of trading using opposite Lyxor 1 and ALLIANZ TECHNOTRLS-025 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, ALLIANZ TECHNOTRLS-025 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 ALLIANZ TECHNOTRLS-025 will offset losses from the drop in ALLIANZ TECHNOTRLS-025's long position.

The idea behind Lyxor 1 and ALLIANZ TECHNOTRLS 025 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.