Correlation Between Lyxor 1 and Ensign

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

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

Diversification Opportunities for Lyxor 1 and Ensign

0.57

Correlation Coefficient

Lyxor 1 Ensign

Very weak diversification

The 3 months correlation between Lyxor and Ensign is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 - and The Ensign Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ensign Group 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 Ensign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ensign Group has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Ensign go up and down completely randomly.

Pair Corralation between Lyxor 1 and Ensign

Assuming the 90 days trading horizon Lyxor 1 is expected to under-perform the Ensign. But the etf apears to be less risky and, when comparing its historical volatility, Lyxor 1 is 1.28 times less risky than Ensign. The etf trades about -0.03 of its potential returns per unit of risk. The The Ensign Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6,971  in The Ensign Group on March 3, 2023 and sell it today you would earn a total of  1,179  from holding The Ensign Group or generate 16.91% return on investment over 90 days.

Lyxor 1 -  vs.  The Ensign Group

Lyxor 1 -

Lyxor Performance

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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.

Ensign Group

Ensign Performance

0 of 100

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

Pair Trading with Lyxor 1 and Ensign

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

The idea behind Lyxor 1 and The Ensign Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.