Correlation Between HSBC SP and Multi Units
Can any of the company-specific risk be diversified away by investing in both HSBC SP and Multi Units 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 Multi Units 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 Multi Units Luxembourg, you can compare the effects of market volatilities on HSBC SP and Multi Units 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 Multi Units. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC SP and Multi Units.
Diversification Opportunities for HSBC SP and Multi Units
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HSBC and Multi is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding HSBC SP 500 and Multi Units Luxembourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units Luxembourg 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 Multi Units. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units Luxembourg has no effect on the direction of HSBC SP i.e., HSBC SP and Multi Units go up and down completely randomly.
Pair Corralation between HSBC SP and Multi Units
Assuming the 90 days trading horizon HSBC SP 500 is expected to generate 0.48 times more return on investment than Multi Units. However, HSBC SP 500 is 2.08 times less risky than Multi Units. It trades about 0.14 of its potential returns per unit of risk. Multi Units Luxembourg is currently generating about 0.06 per unit of risk. If you would invest 3,943 in HSBC SP 500 on August 31, 2024 and sell it today you would earn a total of 1,840 from holding HSBC SP 500 or generate 46.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC SP 500 vs. Multi Units Luxembourg
Performance |
| Timeline |
| HSBC SP 500 |
| Multi Units Luxembourg |
HSBC SP and Multi Units Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC SP and Multi Units
The main advantage of trading using opposite HSBC SP and Multi Units positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC SP position performs unexpectedly, Multi Units 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 Multi Units will offset losses from the drop in Multi Units' 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 |
| Multi Units vs. Multi Units France | Multi Units vs. Lyxor MSCI China | Multi Units vs. Lyxor Commodities RefinitivCoreCommodity | Multi Units vs. Manitou BF SA |
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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