Correlation Between HSBC FTSE and HSBC ETFs

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

Diversification Opportunities for HSBC FTSE and HSBC ETFs

-0.45

Correlation Coefficient

HSBC FTSE  HSBC ETFs

Very good diversification

The 3 months correlation between HSBC and HSBC is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding HSBC FTSE EPRA and HSBC ETFs Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC ETFs Public 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 HSBC ETFs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC ETFs Public has no effect on the direction of HSBC FTSE i.e., HSBC FTSE and HSBC ETFs go up and down completely randomly.

Pair Corralation between HSBC FTSE and HSBC ETFs

Assuming the 90 days trading horizon HSBC FTSE EPRA is expected to under-perform the HSBC ETFs. But the etf apears to be less risky and, when comparing its historical volatility, HSBC FTSE EPRA is 1.03 times less risky than HSBC ETFs. The etf trades about -0.02 of its potential returns per unit of risk. The HSBC ETFs Public is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  5,274  in HSBC ETFs Public on September 5, 2024 and sell it today you would earn a total of  589.00  from holding HSBC ETFs Public or generate 11.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

HSBC FTSE EPRA  vs.  HSBC ETFs Public

HSBC FTSE EPRA

Risk-Adjusted Performance

0 of 100

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

HSBC ETFs Public

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC ETFs Public are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, HSBC ETFs may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with HSBC FTSE and HSBC ETFs

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

The idea behind HSBC FTSE EPRA and HSBC ETFs Public 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.