Correlation Between Lyxor 1 and INVITATION HOMES

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

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

Diversification Opportunities for Lyxor 1 and INVITATION HOMES

-0.46

Correlation Coefficient

Lyxor 1  INVITATION HOMES

Very good diversification

The 3 months correlation between Lyxor and INVITATION is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and INVITATION HOMES DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INVITATION HOMES 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 INVITATION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INVITATION HOMES has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and INVITATION HOMES go up and down completely randomly.

Pair Corralation between Lyxor 1 and INVITATION HOMES

Assuming the 90 days trading horizon Lyxor 1 is expected to generate 0.82 times more return on investment than INVITATION HOMES. However, Lyxor 1 is 1.22 times less risky than INVITATION HOMES. It trades about 0.14 of its potential returns per unit of risk. INVITATION HOMES DL is currently generating about -0.1 per unit of risk. If you would invest  2,604  in Lyxor 1 on April 24, 2025 and sell it today you would earn a total of  205.00  from holding Lyxor 1 or generate 7.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Lyxor 1   vs.  INVITATION HOMES DL

Lyxor 1

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor 1 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Lyxor 1 may actually be approaching a critical reversion point that can send shares even higher in August 2025.

INVITATION HOMES

Risk-Adjusted Performance

Very Weak

Over the last 90 days INVITATION HOMES DL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Lyxor 1 and INVITATION HOMES

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

The idea behind Lyxor 1 and INVITATION HOMES DL 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.