Correlation Between HSBC SP and 21Shares Polkadot
Can any of the company-specific risk be diversified away by investing in both HSBC SP and 21Shares Polkadot 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 HSBC SP and 21Shares Polkadot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC SP 500 and 21Shares Polkadot ETP, you can compare the effects of market volatilities on HSBC SP and 21Shares Polkadot 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 HSBC SP with a short position of 21Shares Polkadot. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC SP and 21Shares Polkadot.
Diversification Opportunities for HSBC SP and 21Shares Polkadot
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HSBC and 21Shares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding HSBC SP 500 and 21Shares Polkadot ETP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 21Shares Polkadot ETP and HSBC SP 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 HSBC SP 500 are associated (or correlated) with 21Shares Polkadot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 21Shares Polkadot ETP has no effect on the direction of HSBC SP i.e., HSBC SP and 21Shares Polkadot go up and down completely randomly.
Pair Corralation between HSBC SP and 21Shares Polkadot
Assuming the 90 days trading horizon HSBC SP is expected to generate 6.94 times less return on investment than 21Shares Polkadot. But when comparing it to its historical volatility, HSBC SP 500 is 8.36 times less risky than 21Shares Polkadot. It trades about 0.12 of its potential returns per unit of risk. 21Shares Polkadot ETP is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 334.00 in 21Shares Polkadot ETP on October 23, 2024 and sell it today you would earn a total of 28.00 from holding 21Shares Polkadot ETP or generate 8.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC SP 500 vs. 21Shares Polkadot ETP
Performance |
| Timeline |
| HSBC SP 500 |
| 21Shares Polkadot ETP |
HSBC SP and 21Shares Polkadot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC SP and 21Shares Polkadot
The main advantage of trading using opposite HSBC SP and 21Shares Polkadot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC SP position performs unexpectedly, 21Shares Polkadot 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 21Shares Polkadot will offset losses from the drop in 21Shares Polkadot's long position.| HSBC SP vs. HSBC MSCI China | HSBC SP vs. HSBC Emerging Market | HSBC SP vs. HSBC USA Sustainable | HSBC SP vs. HSBC MSCI Japan |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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