How closely correlated is the performance of Lyxor ETF EuroMTS Inflation linkedwith the underlying index?
Lyxor ETF EuroMTS Inflation linkedis designed to replicate as perfectly as possible the performance of the EuroMTS Inflation linkedindex Since their launch, Lyxor Etfs’ correlation has been over 99.99%. One of the market mechanisms that helps to keep trackers trading at a price close to the level of the underlying index is arbitrage. Because trackers are created in exchange for bonds that make up the underlying index and can be redeemed in exchange for bonds in the underlying index on any given day, arbitrage traders can profit from any price discrepancies between trackers and the related index, which helps to reduce this discrepancy.
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