Correlation Between HSBC Emerging and Leverage Shares
Can any of the company-specific risk be diversified away by investing in both HSBC Emerging and Leverage Shares 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 Emerging and Leverage Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC Emerging Market and Leverage Shares 3x, you can compare the effects of market volatilities on HSBC Emerging and Leverage Shares 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 Emerging with a short position of Leverage Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Emerging and Leverage Shares.
Diversification Opportunities for HSBC Emerging and Leverage Shares
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HSBC and Leverage is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Emerging Market and Leverage Shares 3x in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leverage Shares 3x and HSBC Emerging 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 Emerging Market are associated (or correlated) with Leverage Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leverage Shares 3x has no effect on the direction of HSBC Emerging i.e., HSBC Emerging and Leverage Shares go up and down completely randomly.
Pair Corralation between HSBC Emerging and Leverage Shares
Assuming the 90 days trading horizon HSBC Emerging Market is expected to under-perform the Leverage Shares. But the etf apears to be less risky and, when comparing its historical volatility, HSBC Emerging Market is 17.25 times less risky than Leverage Shares. The etf trades about -0.23 of its potential returns per unit of risk. The Leverage Shares 3x is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,393,560 in Leverage Shares 3x on August 30, 2024 and sell it today you would earn a total of 2,189,705 from holding Leverage Shares 3x or generate 157.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Emerging Market vs. Leverage Shares 3x
Performance |
| Timeline |
| HSBC Emerging Market |
| Leverage Shares 3x |
HSBC Emerging and Leverage Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Emerging and Leverage Shares
The main advantage of trading using opposite HSBC Emerging and Leverage Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Emerging position performs unexpectedly, Leverage Shares 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 Leverage Shares will offset losses from the drop in Leverage Shares' long position.| HSBC Emerging vs. HSBC FTSE EPRA | HSBC Emerging vs. HSBC SP 500 | HSBC Emerging vs. HSBC MSCI Emerging | HSBC Emerging vs. HSBC NASDAQ Global |
| Leverage Shares vs. GraniteShares 3x Short | Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares vs. WisdomTree Natural Gas | Leverage Shares 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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