Correlation Between Lyxor Japan and UBS ETF

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

By analyzing existing cross correlation between Lyxor Japan UCITS and UBS ETF Gold, you can compare the effects of market volatilities on Lyxor Japan and UBS ETF 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 Japan with a short position of UBS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor Japan and UBS ETF.

Diversification Opportunities for Lyxor Japan and UBS ETF

0.63

Correlation Coefficient

Lyxor Japan  UBS ETF

Poor diversification

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

Pair Corralation between Lyxor Japan and UBS ETF

Assuming the 90 days trading horizon Lyxor Japan is expected to generate 4.49 times less return on investment than UBS ETF. But when comparing it to its historical volatility, Lyxor Japan UCITS is 1.07 times less risky than UBS ETF. It trades about 0.02 of its potential returns per unit of risk. UBS ETF Gold is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8,161  in UBS ETF Gold on February 2, 2024 and sell it today you would earn a total of  143.00  from holding UBS ETF Gold or generate 1.75% return on investment over 90 days.

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

Lyxor Japan UCITS  vs.  UBS ETF Gold

Lyxor Japan UCITS

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor Japan UCITS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Lyxor Japan may actually be approaching a critical reversion point that can send shares even higher in June 2024.

UBS ETF Gold

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBS ETF Gold are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, UBS ETF may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Lyxor Japan and UBS ETF

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

The idea behind Lyxor Japan UCITS and UBS ETF Gold 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.