Correlation Between Leverage Shares and HSBC Emerging
Can any of the company-specific risk be diversified away by investing in both Leverage Shares and HSBC Emerging 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 Leverage Shares and HSBC Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leverage Shares 3x and HSBC Emerging Market, you can compare the effects of market volatilities on Leverage Shares and HSBC Emerging 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 Leverage Shares with a short position of HSBC Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and HSBC Emerging.
Diversification Opportunities for Leverage Shares and HSBC Emerging
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Leverage and HSBC is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 3x and HSBC Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Emerging Market and Leverage Shares 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 Leverage Shares 3x are associated (or correlated) with HSBC Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Emerging Market has no effect on the direction of Leverage Shares i.e., Leverage Shares and HSBC Emerging go up and down completely randomly.
Pair Corralation between Leverage Shares and HSBC Emerging
Assuming the 90 days trading horizon Leverage Shares 3x is expected to generate 9.42 times more return on investment than HSBC Emerging. However, Leverage Shares is 9.42 times more volatile than HSBC Emerging Market. It trades about 0.25 of its potential returns per unit of risk. HSBC Emerging Market is currently generating about -0.23 per unit of risk. If you would invest 2,071 in Leverage Shares 3x on August 30, 2024 and sell it today you would earn a total of 1,123 from holding Leverage Shares 3x or generate 54.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 3x vs. HSBC Emerging Market
Performance |
| Timeline |
| Leverage Shares 3x |
| HSBC Emerging Market |
Leverage Shares and HSBC Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and HSBC Emerging
The main advantage of trading using opposite Leverage Shares and HSBC Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares position performs unexpectedly, HSBC Emerging 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 HSBC Emerging will offset losses from the drop in HSBC Emerging's long position.| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
| HSBC Emerging vs. HSBC FTSE EPRA | HSBC Emerging vs. HSBC SP 500 | HSBC Emerging vs. HSBC MSCI Emerging | HSBC Emerging vs. HSBC NASDAQ Global |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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