Correlation Between Lyxor PEA and HSBC UK
Can any of the company-specific risk be diversified away by investing in both Lyxor PEA and HSBC UK 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 Lyxor PEA and HSBC UK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor PEA Nasdaq and HSBC UK SUS, you can compare the effects of market volatilities on Lyxor PEA and HSBC UK 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 Lyxor PEA with a short position of HSBC UK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor PEA and HSBC UK.
Diversification Opportunities for Lyxor PEA and HSBC UK
Very good diversification
The 3 months correlation between Lyxor and HSBC is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor PEA Nasdaq and HSBC UK SUS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC UK SUS and Lyxor PEA 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 Lyxor PEA Nasdaq are associated (or correlated) with HSBC UK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC UK SUS has no effect on the direction of Lyxor PEA i.e., Lyxor PEA and HSBC UK go up and down completely randomly.
Pair Corralation between Lyxor PEA and HSBC UK
Assuming the 90 days trading horizon Lyxor PEA Nasdaq is expected to generate 1.4 times more return on investment than HSBC UK. However, Lyxor PEA is 1.4 times more volatile than HSBC UK SUS. It trades about 0.15 of its potential returns per unit of risk. HSBC UK SUS is currently generating about 0.09 per unit of risk. If you would invest 7,578 in Lyxor PEA Nasdaq on August 31, 2024 and sell it today you would earn a total of 340.00 from holding Lyxor PEA Nasdaq or generate 4.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lyxor PEA Nasdaq vs. HSBC UK SUS
Performance |
| Timeline |
| Lyxor PEA Nasdaq |
| HSBC UK SUS |
Lyxor PEA and HSBC UK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor PEA and HSBC UK
The main advantage of trading using opposite Lyxor PEA and HSBC UK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor PEA position performs unexpectedly, HSBC UK 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 UK will offset losses from the drop in HSBC UK's long position.| Lyxor PEA vs. Lyxor SP 500 | Lyxor PEA vs. Lyxor UCITS Daily | Lyxor PEA vs. Lyxor UCITS MSCI | Lyxor PEA vs. Lyxor Treasury 10Y |
| HSBC UK vs. HSBC MSCI China | HSBC UK vs. HSBC Emerging Market | HSBC UK vs. HSBC USA Sustainable | HSBC UK vs. HSBC MSCI Japan |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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