Correlation Between HSBC SP and Gold Bullion
Can any of the company-specific risk be diversified away by investing in both HSBC SP and Gold Bullion 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 Gold Bullion 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 Gold Bullion Securities, you can compare the effects of market volatilities on HSBC SP and Gold Bullion 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 Gold Bullion. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC SP and Gold Bullion.
Diversification Opportunities for HSBC SP and Gold Bullion
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HSBC and Gold is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding HSBC SP 500 and Gold Bullion Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Bullion Securities 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 Gold Bullion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Bullion Securities has no effect on the direction of HSBC SP i.e., HSBC SP and Gold Bullion go up and down completely randomly.
Pair Corralation between HSBC SP and Gold Bullion
Assuming the 90 days trading horizon HSBC SP 500 is expected to generate 0.54 times more return on investment than Gold Bullion. However, HSBC SP 500 is 1.86 times less risky than Gold Bullion. It trades about 0.07 of its potential returns per unit of risk. Gold Bullion Securities is currently generating about -0.03 per unit of risk. If you would invest 5,728 in HSBC SP 500 on September 22, 2024 and sell it today you would earn a total of 52.00 from holding HSBC SP 500 or generate 0.91% 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. Gold Bullion Securities
Performance |
| Timeline |
| HSBC SP 500 |
| Gold Bullion Securities |
HSBC SP and Gold Bullion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC SP and Gold Bullion
The main advantage of trading using opposite HSBC SP and Gold Bullion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC SP position performs unexpectedly, Gold Bullion 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 Gold Bullion will offset losses from the drop in Gold Bullion's long position.| HSBC SP vs. Lyxor UCITS Japan | HSBC SP vs. Lyxor UCITS Japan | HSBC SP vs. Lyxor UCITS Stoxx | HSBC SP vs. Amundi CAC 40 |
| Gold Bullion vs. Lyxor UCITS Japan | Gold Bullion vs. Lyxor UCITS Japan | Gold Bullion vs. Lyxor UCITS Stoxx | Gold Bullion 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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