Correlation Between Lyxor 1 and HANetf ICAV

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

By analyzing existing cross correlation between Lyxor 1 and HANetf ICAV , you can compare the effects of market volatilities on Lyxor 1 and HANetf ICAV 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 HANetf ICAV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and HANetf ICAV.

Diversification Opportunities for Lyxor 1 and HANetf ICAV

0.64

Correlation Coefficient

Lyxor 1  HANetf ICAV

Poor diversification

The 3 months correlation between Lyxor and HANetf is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and HANetf ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANetf ICAV 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 HANetf ICAV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANetf ICAV has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and HANetf ICAV go up and down completely randomly.

Pair Corralation between Lyxor 1 and HANetf ICAV

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 35.82 times less return on investment than HANetf ICAV. But when comparing it to its historical volatility, Lyxor 1 is 1.26 times less risky than HANetf ICAV. It trades about 0.01 of its potential returns per unit of risk. HANetf ICAV is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  705.00  in HANetf ICAV on September 27, 2024 and sell it today you would earn a total of  152.00  from holding HANetf ICAV or generate 21.56% return on investment over 90 days.

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

Lyxor 1   vs.  HANetf ICAV

Lyxor 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyxor 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lyxor 1 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

HANetf ICAV

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HANetf ICAV are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, HANetf ICAV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lyxor 1 and HANetf ICAV

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

The idea behind Lyxor 1 and HANetf ICAV 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.