Correlation Between HSBC FTSE and GraniteShares

Can any of the company-specific risk be diversified away by investing in both HSBC FTSE and GraniteShares 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 FTSE and GraniteShares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HSBC FTSE EPRA and GraniteShares 3x Short, you can compare the effects of market volatilities on HSBC FTSE and GraniteShares 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 FTSE with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC FTSE and GraniteShares.

Diversification Opportunities for HSBC FTSE and GraniteShares

-0.07

Correlation Coefficient

HSBC FTSE  GraniteShares

Good diversification

The 3 months correlation between HSBC and GraniteShares is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding HSBC FTSE EPRA and GraniteShares 3x Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 3x Short and HSBC FTSE 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 FTSE EPRA are associated (or correlated) with GraniteShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares 3x Short has no effect on the direction of HSBC FTSE i.e., HSBC FTSE and GraniteShares go up and down completely randomly.

Pair Corralation between HSBC FTSE and GraniteShares

Assuming the 90 days trading horizon HSBC FTSE EPRA is expected to under-perform the GraniteShares. But the etf apears to be less risky and, when comparing its historical volatility, HSBC FTSE EPRA is 14.04 times less risky than GraniteShares. The etf trades about -0.05 of its potential returns per unit of risk. The GraniteShares 3x Short is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  63,463  in GraniteShares 3x Short on December 2, 2024 and sell it today you would lose (3,550) from holding GraniteShares 3x Short or give up 5.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

HSBC FTSE EPRA  vs.  GraniteShares 3x Short

HSBC FTSE EPRA

Risk-Adjusted Performance

Very Weak

Over the last 90 days HSBC FTSE EPRA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HSBC FTSE is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

GraniteShares 3x Short

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 3x Short are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, GraniteShares unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HSBC FTSE and GraniteShares

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

The idea behind HSBC FTSE EPRA and GraniteShares 3x Short 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.