Correlation Between HSBC SP and Lyxor UCITS
Can any of the company-specific risk be diversified away by investing in both HSBC SP and Lyxor UCITS 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 Lyxor UCITS 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 Lyxor UCITS Daily, you can compare the effects of market volatilities on HSBC SP and Lyxor UCITS 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 Lyxor UCITS. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC SP and Lyxor UCITS.
Diversification Opportunities for HSBC SP and Lyxor UCITS
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HSBC and Lyxor is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding HSBC SP 500 and Lyxor UCITS Daily in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor UCITS Daily 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 Lyxor UCITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor UCITS Daily has no effect on the direction of HSBC SP i.e., HSBC SP and Lyxor UCITS go up and down completely randomly.
Pair Corralation between HSBC SP and Lyxor UCITS
Assuming the 90 days trading horizon HSBC SP 500 is expected to generate 0.96 times more return on investment than Lyxor UCITS. However, HSBC SP 500 is 1.05 times less risky than Lyxor UCITS. It trades about 0.14 of its potential returns per unit of risk. Lyxor UCITS Daily is currently generating about 0.07 per unit of risk. If you would invest 4,703 in HSBC SP 500 on September 1, 2024 and sell it today you would earn a total of 1,080 from holding HSBC SP 500 or generate 22.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.48% |
| Values | Daily Returns |
HSBC SP 500 vs. Lyxor UCITS Daily
Performance |
| Timeline |
| HSBC SP 500 |
| Lyxor UCITS Daily |
HSBC SP and Lyxor UCITS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC SP and Lyxor UCITS
The main advantage of trading using opposite HSBC SP and Lyxor UCITS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC SP position performs unexpectedly, Lyxor UCITS 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 Lyxor UCITS will offset losses from the drop in Lyxor UCITS'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 |
| Lyxor UCITS vs. Lyxor UCITS CAC | Lyxor UCITS vs. Lyxor UCITS Daily | Lyxor UCITS vs. Lyxor UCITS Stoxx | Lyxor UCITS vs. Lyxor UCITS Stoxx |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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