Correlation Between HSBC SP and Amundi ETF
Can any of the company-specific risk be diversified away by investing in both HSBC SP and Amundi ETF 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 Amundi ETF 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 Amundi ETF Govies, you can compare the effects of market volatilities on HSBC SP and Amundi ETF 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 Amundi ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC SP and Amundi ETF.
Diversification Opportunities for HSBC SP and Amundi ETF
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HSBC and Amundi is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding HSBC SP 500 and Amundi ETF Govies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amundi ETF Govies 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 Amundi ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amundi ETF Govies has no effect on the direction of HSBC SP i.e., HSBC SP and Amundi ETF go up and down completely randomly.
Pair Corralation between HSBC SP and Amundi ETF
If you would invest 4,070 in HSBC SP 500 on August 28, 2024 and sell it today you would earn a total of 1,709 from holding HSBC SP 500 or generate 41.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 0.0% |
| Values | Daily Returns |
HSBC SP 500 vs. Amundi ETF Govies
Performance |
| Timeline |
| HSBC SP 500 |
| Amundi ETF Govies |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
HSBC SP and Amundi ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC SP and Amundi ETF
The main advantage of trading using opposite HSBC SP and Amundi ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC SP position performs unexpectedly, Amundi ETF 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 Amundi ETF will offset losses from the drop in Amundi ETF's long position.The idea behind HSBC SP 500 and Amundi ETF Govies 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.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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