Correlation Between HSBC SP and HSBC FTSE
Can any of the company-specific risk be diversified away by investing in both HSBC SP 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 SP 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 SP 500 and HSBC FTSE EPRA, you can compare the effects of market volatilities on HSBC SP 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 SP with a short position of HSBC FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC SP and HSBC FTSE.
Diversification Opportunities for HSBC SP and HSBC FTSE
Very good diversification
The 3 months correlation between HSBC and HSBC is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding HSBC SP 500 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 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 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 SP i.e., HSBC SP and HSBC FTSE go up and down completely randomly.
Pair Corralation between HSBC SP and HSBC FTSE
Assuming the 90 days trading horizon HSBC SP 500 is expected to generate 1.19 times more return on investment than HSBC FTSE. However, HSBC SP is 1.19 times more volatile than HSBC FTSE EPRA. It trades about 0.27 of its potential returns per unit of risk. HSBC FTSE EPRA is currently generating about 0.2 per unit of risk. If you would invest 453,090 in HSBC SP 500 on August 30, 2024 and sell it today you would earn a total of 25,615 from holding HSBC SP 500 or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC SP 500 vs. HSBC FTSE EPRA
Performance |
| Timeline |
| HSBC SP 500 |
| HSBC FTSE EPRA |
HSBC SP and HSBC FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC SP and HSBC FTSE
The main advantage of trading using opposite HSBC SP and HSBC FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC SP 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 SP vs. HSBC FTSE EPRA | HSBC SP vs. HSBC MSCI Emerging | HSBC SP vs. HSBC NASDAQ Global | HSBC SP vs. HSBC MSCI USA |
| HSBC FTSE vs. HSBC FTSE EPRA | HSBC FTSE vs. HSBC SP 500 | HSBC FTSE vs. HSBC MSCI Emerging | HSBC FTSE 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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