Correlation Between WisdomTree Aluminium and Lyxor MSCI

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

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

Diversification Opportunities for WisdomTree Aluminium and Lyxor MSCI

0.89

Correlation Coefficient

WisdomTree Aluminium  Lyxor MSCI

Very poor diversification

The 3 months correlation between WisdomTree and Lyxor is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Aluminium 2x and Lyxor MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor MSCI World and WisdomTree Aluminium 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 WisdomTree Aluminium 2x are associated (or correlated) with Lyxor MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor MSCI World has no effect on the direction of WisdomTree Aluminium i.e., WisdomTree Aluminium and Lyxor MSCI go up and down completely randomly.

Pair Corralation between WisdomTree Aluminium and Lyxor MSCI

Assuming the 90 days trading horizon WisdomTree Aluminium 2x is expected to generate 1.54 times more return on investment than Lyxor MSCI. However, WisdomTree Aluminium is 1.54 times more volatile than Lyxor MSCI World. It trades about 0.18 of its potential returns per unit of risk. Lyxor MSCI World is currently generating about 0.28 per unit of risk. If you would invest  206.00  in WisdomTree Aluminium 2x on April 25, 2025 and sell it today you would earn a total of  11.00  from holding WisdomTree Aluminium 2x or generate 5.34% return on investment over 90 days.

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

WisdomTree Aluminium 2x  vs.  Lyxor MSCI World

WisdomTree Aluminium

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Aluminium 2x are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WisdomTree Aluminium unveiled solid returns over the last few months and may actually be approaching a breakup point.

Lyxor MSCI World

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lyxor MSCI World are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Lyxor MSCI unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WisdomTree Aluminium and Lyxor MSCI

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

The idea behind WisdomTree Aluminium 2x and Lyxor MSCI World 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.