Correlation Between Lyxor 1 and Microchip Technology
Can any of the company-specific risk be diversified away by investing in both Lyxor 1 and Microchip Technology 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 Microchip Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor 1 and Microchip Technology Incorporated, you can compare the effects of market volatilities on Lyxor 1 and Microchip Technology 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 Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor 1 and Microchip Technology.
Diversification Opportunities for Lyxor 1 and Microchip Technology
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lyxor and Microchip is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor 1 and Microchip Technology Incorpora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Lyxor 1 i.e., Lyxor 1 and Microchip Technology go up and down completely randomly.
Pair Corralation between Lyxor 1 and Microchip Technology
Assuming the 90 days trading horizon Lyxor 1 is expected to generate 5.76 times less return on investment than Microchip Technology. But when comparing it to its historical volatility, Lyxor 1 is 3.93 times less risky than Microchip Technology. It trades about 0.19 of its potential returns per unit of risk. Microchip Technology Incorporated is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,633 in Microchip Technology Incorporated on April 23, 2025 and sell it today you would earn a total of 2,774 from holding Microchip Technology Incorporated or generate 76.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Lyxor 1 vs. Microchip Technology Incorpora
Performance |
Timeline |
Lyxor 1 |
Microchip Technology |
Lyxor 1 and Microchip Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lyxor 1 and Microchip Technology
The main advantage of trading using opposite Lyxor 1 and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor 1 position performs unexpectedly, Microchip Technology 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 Microchip Technology will offset losses from the drop in Microchip Technology's long position.Lyxor 1 vs. Lyxor Fed Funds | Lyxor 1 vs. Lyxor BofAML USD | Lyxor 1 vs. Lyxor Index Fund | Lyxor 1 vs. Lyxor 1 TecDAX |
Microchip Technology vs. LG Display Co | Microchip Technology vs. GEELY AUTOMOBILE | Microchip Technology vs. Cogent Communications Holdings | Microchip Technology vs. Gaming and Leisure |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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