Correlation Between Lyxor UCITS and HSBC SP
Can any of the company-specific risk be diversified away by investing in both Lyxor UCITS and HSBC SP 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 HSBC SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor UCITS Daily and HSBC SP 500, you can compare the effects of market volatilities on Lyxor UCITS and HSBC SP 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 HSBC SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor UCITS and HSBC SP.
Diversification Opportunities for Lyxor UCITS and HSBC SP
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lyxor and HSBC is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor UCITS Daily and HSBC SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC SP 500 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 Daily are associated (or correlated) with HSBC SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC SP 500 has no effect on the direction of Lyxor UCITS i.e., Lyxor UCITS and HSBC SP go up and down completely randomly.
Pair Corralation between Lyxor UCITS and HSBC SP
Assuming the 90 days trading horizon Lyxor UCITS Daily is expected to under-perform the HSBC SP. In addition to that, Lyxor UCITS is 1.21 times more volatile than HSBC SP 500. It trades about -0.18 of its total potential returns per unit of risk. HSBC SP 500 is currently generating about 0.29 per unit of volatility. If you would invest 5,651 in HSBC SP 500 on September 17, 2024 and sell it today you would earn a total of 204.00 from holding HSBC SP 500 or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lyxor UCITS Daily vs. HSBC SP 500
Performance |
| Timeline |
| Lyxor UCITS Daily |
| HSBC SP 500 |
Lyxor UCITS and HSBC SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor UCITS and HSBC SP
The main advantage of trading using opposite Lyxor UCITS and HSBC SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor UCITS position performs unexpectedly, HSBC SP 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 SP will offset losses from the drop in HSBC SP's long position.The idea behind Lyxor UCITS Daily and HSBC SP 500 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.| HSBC SP vs. Lyxor UCITS Japan | HSBC SP vs. Lyxor UCITS Japan | HSBC SP vs. Lyxor UCITS Stoxx | HSBC SP vs. Amundi CAC 40 |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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