Correlation Between Lyxor CAC and HSBC UK
Can any of the company-specific risk be diversified away by investing in both Lyxor CAC and HSBC UK 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 CAC and HSBC UK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor CAC 40 and HSBC UK SUS, you can compare the effects of market volatilities on Lyxor CAC and HSBC UK 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 CAC with a short position of HSBC UK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor CAC and HSBC UK.
Diversification Opportunities for Lyxor CAC and HSBC UK
Poor diversification
The 3 months correlation between Lyxor and HSBC is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor CAC 40 and HSBC UK SUS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC UK SUS and Lyxor CAC 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 CAC 40 are associated (or correlated) with HSBC UK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC UK SUS has no effect on the direction of Lyxor CAC i.e., Lyxor CAC and HSBC UK go up and down completely randomly.
Pair Corralation between Lyxor CAC and HSBC UK
Assuming the 90 days trading horizon Lyxor CAC 40 is expected to under-perform the HSBC UK. But the etf apears to be less risky and, when comparing its historical volatility, Lyxor CAC 40 is 1.08 times less risky than HSBC UK. The etf trades about -0.16 of its potential returns per unit of risk. The HSBC UK SUS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,163 in HSBC UK SUS on August 31, 2024 and sell it today you would earn a total of 38.00 from holding HSBC UK SUS or generate 1.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor CAC 40 vs. HSBC UK SUS
Performance |
| Timeline |
| Lyxor CAC 40 |
| HSBC UK SUS |
Lyxor CAC and HSBC UK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor CAC and HSBC UK
The main advantage of trading using opposite Lyxor CAC and HSBC UK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor CAC position performs unexpectedly, HSBC UK 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 UK will offset losses from the drop in HSBC UK's long position.| Lyxor CAC vs. Amundi Index Solutions | Lyxor CAC vs. Amundi ETF PEA | Lyxor CAC vs. Amundi ETF PEA | Lyxor CAC vs. Amundi Index Solutions |
| HSBC UK vs. HSBC MSCI China | HSBC UK vs. HSBC Emerging Market | HSBC UK vs. HSBC USA Sustainable | HSBC UK vs. HSBC MSCI Japan |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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