Correlation Between Lyxor 10Y and Leverage Shares

Can any of the company-specific risk be diversified away by investing in both Lyxor 10Y and Leverage Shares 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 10Y and Leverage Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lyxor 10Y Inflation and Leverage Shares 2x, you can compare the effects of market volatilities on Lyxor 10Y and Leverage Shares 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 10Y with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 10Y and Leverage Shares.

Diversification Opportunities for Lyxor 10Y and Leverage Shares

0.08

Correlation Coefficient

Lyxor 10Y  Leverage Shares

Significant diversification

The 3 months correlation between Lyxor and Leverage is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 10Y Inflation and Leverage Shares 2x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 2x and Lyxor 10Y 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 10Y Inflation are associated (or correlated) with Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 2x has no effect on the direction of Lyxor 10Y i.e., Lyxor 10Y and Leverage Shares go up and down completely randomly.

Pair Corralation between Lyxor 10Y and Leverage Shares

Assuming the 90 days trading horizon Lyxor 10Y Inflation is expected to generate 0.08 times more return on investment than Leverage Shares. However, Lyxor 10Y Inflation is 13.24 times less risky than Leverage Shares. It trades about 0.12 of its potential returns per unit of risk. Leverage Shares 2x is currently generating about -0.04 per unit of risk. If you would invest  13,049  in Lyxor 10Y Inflation on August 24, 2024 and sell it today you would earn a total of  83.00  from holding Lyxor 10Y Inflation or generate 0.64% return on investment over 90 days.

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

Lyxor 10Y Inflation  vs.  Leverage Shares 2x

Lyxor 10Y Inflation

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 10Y Inflation are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Lyxor 10Y is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Leverage Shares 2x

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Leverage Shares 2x are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Leverage Shares 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 Lyxor 10Y and Leverage Shares

The main advantage of trading using opposite Lyxor 10Y and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 10Y position performs unexpectedly, Leverage Shares 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 Leverage Shares will offset losses from the drop in Leverage Shares' long position.

The idea behind Lyxor 10Y Inflation and Leverage Shares 2x 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.