Correlation Between Leverage Shares and HSBC SP
Can any of the company-specific risk be diversified away by investing in both Leverage Shares 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 Leverage Shares and HSBC SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leverage Shares 2x and HSBC SP 500, you can compare the effects of market volatilities on Leverage Shares 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 Leverage Shares with a short position of HSBC SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leverage Shares and HSBC SP.
Diversification Opportunities for Leverage Shares and HSBC SP
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Leverage and HSBC is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Leverage Shares 2x 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 Leverage Shares 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 Leverage Shares 2x 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 Leverage Shares i.e., Leverage Shares and HSBC SP go up and down completely randomly.
Pair Corralation between Leverage Shares and HSBC SP
Assuming the 90 days trading horizon Leverage Shares 2x is expected to under-perform the HSBC SP. In addition to that, Leverage Shares is 4.51 times more volatile than HSBC SP 500. It trades about -0.04 of its total potential returns per unit of risk. HSBC SP 500 is currently generating about 0.31 per unit of volatility. If you would invest 453,470 in HSBC SP 500 on August 27, 2024 and sell it today you would earn a total of 27,975 from holding HSBC SP 500 or generate 6.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leverage Shares 2x vs. HSBC SP 500
Performance |
| Timeline |
| Leverage Shares 2x |
| HSBC SP 500 |
Leverage Shares and HSBC SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leverage Shares and HSBC SP
The main advantage of trading using opposite Leverage Shares and HSBC SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leverage Shares 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.| Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x | Leverage Shares vs. Leverage Shares 3x |
| HSBC SP vs. Leverage Shares 3x | HSBC SP vs. Leverage Shares 3x | HSBC SP vs. Leverage Shares 3x | HSBC SP vs. WisdomTree Short GBP |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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