Correlation Between HSBC Emerging and HSBC FTSE
Can any of the company-specific risk be diversified away by investing in both HSBC Emerging and HSBC FTSE 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 HSBC FTSE 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 HSBC FTSE EPRA, you can compare the effects of market volatilities on HSBC Emerging and HSBC FTSE 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 HSBC FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Emerging and HSBC FTSE.
Diversification Opportunities for HSBC Emerging and HSBC FTSE
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HSBC and HSBC is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Emerging Market and HSBC FTSE EPRA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC FTSE EPRA 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 HSBC FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC FTSE EPRA has no effect on the direction of HSBC Emerging i.e., HSBC Emerging and HSBC FTSE go up and down completely randomly.
Pair Corralation between HSBC Emerging and HSBC FTSE
Assuming the 90 days trading horizon HSBC Emerging Market is expected to under-perform the HSBC FTSE. In addition to that, HSBC Emerging is 1.44 times more volatile than HSBC FTSE EPRA. It trades about -0.23 of its total potential returns per unit of risk. HSBC FTSE EPRA is currently generating about -0.12 per unit of volatility. If you would invest 2,696 in HSBC FTSE EPRA on August 26, 2024 and sell it today you would lose (51.00) from holding HSBC FTSE EPRA or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Emerging Market vs. HSBC FTSE EPRA
Performance |
| Timeline |
| HSBC Emerging Market |
| HSBC FTSE EPRA |
HSBC Emerging and HSBC FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Emerging and HSBC FTSE
The main advantage of trading using opposite HSBC Emerging and HSBC FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Emerging position performs unexpectedly, HSBC FTSE 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 FTSE will offset losses from the drop in HSBC FTSE's long position.| HSBC Emerging vs. Leverage Shares 3x | HSBC Emerging vs. Leverage Shares 3x | HSBC Emerging vs. Leverage Shares 3x | HSBC Emerging vs. WisdomTree Short GBP |
| HSBC FTSE vs. Vanguard FTSE Developed | HSBC FTSE vs. Leverage Shares 2x | HSBC FTSE vs. Amundi Index Solutions | HSBC FTSE vs. Amundi Index Solutions |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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