Correlation Between HSBC SP and Lyxor UCITS

Can any of the company-specific risk be diversified away by investing in both HSBC SP and Lyxor UCITS 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 Lyxor UCITS 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 Lyxor UCITS Japan, you can compare the effects of market volatilities on HSBC SP and Lyxor UCITS 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 Lyxor UCITS. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC SP and Lyxor UCITS.

Diversification Opportunities for HSBC SP and Lyxor UCITS

-0.06

Correlation Coefficient

HSBC SP  Lyxor UCITS

Good diversification

The 3 months correlation between HSBC and Lyxor is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding HSBC SP 500 and Lyxor UCITS Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor UCITS Japan 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 Lyxor UCITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor UCITS Japan has no effect on the direction of HSBC SP i.e., HSBC SP and Lyxor UCITS go up and down completely randomly.

Pair Corralation between HSBC SP and Lyxor UCITS

Assuming the 90 days trading horizon HSBC SP 500 is expected to under-perform the Lyxor UCITS. But the etf apears to be less risky and, when comparing its historical volatility, HSBC SP 500 is 1.01 times less risky than Lyxor UCITS. The etf trades about -0.13 of its potential returns per unit of risk. The Lyxor UCITS Japan is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  21,890  in Lyxor UCITS Japan on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Lyxor UCITS Japan or generate 0.0% 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.  Lyxor UCITS Japan

HSBC SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days HSBC SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Lyxor UCITS Japan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lyxor UCITS Japan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Lyxor UCITS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with HSBC SP and Lyxor UCITS

The main advantage of trading using opposite HSBC SP and Lyxor UCITS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC SP position performs unexpectedly, Lyxor UCITS 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 Lyxor UCITS will offset losses from the drop in Lyxor UCITS's long position.

The idea behind HSBC SP 500 and Lyxor UCITS Japan pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..