Correlation Between Lyxor UCITS and VanEck Solana

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

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

Diversification Opportunities for Lyxor UCITS and VanEck Solana

0.42

Correlation Coefficient

Lyxor UCITS  VanEck Solana

Very weak diversification

The 3 months correlation between Lyxor and VanEck is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor UCITS Japan and VanEck Solana ETN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Solana ETN and Lyxor UCITS 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 UCITS Japan are associated (or correlated) with VanEck Solana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Solana ETN has no effect on the direction of Lyxor UCITS i.e., Lyxor UCITS and VanEck Solana go up and down completely randomly.

Pair Corralation between Lyxor UCITS and VanEck Solana

Assuming the 90 days trading horizon Lyxor UCITS is expected to generate 29.07 times less return on investment than VanEck Solana. But when comparing it to its historical volatility, Lyxor UCITS Japan is 7.21 times less risky than VanEck Solana. It trades about 0.07 of its potential returns per unit of risk. VanEck Solana ETN is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  857.00  in VanEck Solana ETN on September 1, 2024 and sell it today you would earn a total of  368.00  from holding VanEck Solana ETN or generate 42.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.96%
Values	Daily Returns

Lyxor UCITS Japan  vs.  VanEck Solana ETN

Lyxor UCITS Japan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyxor UCITS Japan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lyxor UCITS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

VanEck Solana ETN

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Solana ETN are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, VanEck Solana sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lyxor UCITS and VanEck Solana

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

The idea behind Lyxor UCITS Japan and VanEck Solana ETN 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.