Correlation Between HSBC SP and HSBC ETFs
Can any of the company-specific risk be diversified away by investing in both HSBC SP and HSBC ETFs 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 HSBC ETFs 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 HSBC ETFs Public, you can compare the effects of market volatilities on HSBC SP and HSBC ETFs 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 HSBC ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC SP and HSBC ETFs.
Diversification Opportunities for HSBC SP and HSBC ETFs
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 SP 500 and HSBC ETFs Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC ETFs Public 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 HSBC ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC ETFs Public has no effect on the direction of HSBC SP i.e., HSBC SP and HSBC ETFs go up and down completely randomly.
Pair Corralation between HSBC SP and HSBC ETFs
Assuming the 90 days trading horizon HSBC SP is expected to generate 1.03 times less return on investment than HSBC ETFs. But when comparing it to its historical volatility, HSBC SP 500 is 1.04 times less risky than HSBC ETFs. It trades about 0.16 of its potential returns per unit of risk. HSBC ETFs Public is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,412 in HSBC ETFs Public on September 4, 2024 and sell it today you would earn a total of 1,449 from holding HSBC ETFs Public or generate 32.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC SP 500 vs. HSBC ETFs Public
Performance |
| Timeline |
| HSBC SP 500 |
| HSBC ETFs Public |
HSBC SP and HSBC ETFs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC SP and HSBC ETFs
The main advantage of trading using opposite HSBC SP and HSBC ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC SP position performs unexpectedly, HSBC ETFs 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 ETFs will offset losses from the drop in HSBC ETFs' long position.| HSBC SP vs. WisdomTree Natural Gas | HSBC SP vs. WisdomTree NASDAQ 100 | HSBC SP vs. WisdomTree Silver 3x | HSBC SP vs. WisdomTree SP 500 |
| HSBC ETFs vs. HSBC FTSE EPRA | HSBC ETFs vs. HSBC SP 500 | HSBC ETFs vs. HSBC MSCI Emerging | HSBC ETFs vs. HSBC NASDAQ Global |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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