Correlation Between HSBC ETFs and HSBC SP
Can any of the company-specific risk be diversified away by investing in both HSBC ETFs and HSBC SP 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 ETFs and HSBC SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC ETFs Public and HSBC SP 500, you can compare the effects of market volatilities on HSBC ETFs and HSBC SP 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 ETFs with a short position of HSBC SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC ETFs and HSBC SP.
Diversification Opportunities for HSBC ETFs and HSBC SP
Almost no diversification
The 3 months correlation between HSBC and HSBC is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding HSBC ETFs Public and HSBC SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC SP 500 and HSBC ETFs 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 ETFs Public are associated (or correlated) with HSBC SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC SP 500 has no effect on the direction of HSBC ETFs i.e., HSBC ETFs and HSBC SP go up and down completely randomly.
Pair Corralation between HSBC ETFs and HSBC SP
Assuming the 90 days trading horizon HSBC ETFs is expected to generate 1.28 times less return on investment than HSBC SP. But when comparing it to its historical volatility, HSBC ETFs Public is 1.2 times less risky than HSBC SP. It trades about 0.36 of its potential returns per unit of risk. HSBC SP 500 is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 446,690 in HSBC SP 500 on September 3, 2024 and sell it today you would earn a total of 33,710 from holding HSBC SP 500 or generate 7.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC ETFs Public vs. HSBC SP 500
Performance |
| Timeline |
| HSBC ETFs Public |
| HSBC SP 500 |
HSBC ETFs and HSBC SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC ETFs and HSBC SP
The main advantage of trading using opposite HSBC ETFs and HSBC SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC ETFs position performs unexpectedly, HSBC SP 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 HSBC SP will offset losses from the drop in HSBC SP's long position.| HSBC ETFs vs. HSBC FTSE EPRA | HSBC ETFs vs. HSBC SP 500 | HSBC ETFs vs. HSBC MSCI Emerging | HSBC ETFs vs. HSBC NASDAQ Global |
| HSBC SP vs. WisdomTree Natural Gas | HSBC SP vs. WisdomTree NASDAQ 100 | HSBC SP vs. WisdomTree Silver 3x | HSBC SP vs. WisdomTree SP 500 |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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