Correlation Between IShares Treasury and HSBC ETFs

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

By analyzing existing cross correlation between iShares Treasury Bond and HSBC ETFs Public, you can compare the effects of market volatilities on IShares Treasury 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 IShares Treasury with a short position of HSBC ETFs. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Treasury and HSBC ETFs.

Diversification Opportunities for IShares Treasury and HSBC ETFs

0.13

Correlation Coefficient

IShares Treasury  HSBC ETFs

Average diversification

The 3 months correlation between IShares and HSBC is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding iShares Treasury Bond 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 IShares Treasury 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 iShares Treasury Bond 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 IShares Treasury i.e., IShares Treasury and HSBC ETFs go up and down completely randomly.

Pair Corralation between IShares Treasury and HSBC ETFs

Assuming the 90 days trading horizon iShares Treasury Bond is expected to generate 0.9 times more return on investment than HSBC ETFs. However, iShares Treasury Bond is 1.11 times less risky than HSBC ETFs. It trades about 0.08 of its potential returns per unit of risk. HSBC ETFs Public is currently generating about -0.25 per unit of risk. If you would invest  331.00  in iShares Treasury Bond on December 9, 2024 and sell it today you would earn a total of  6.00  from holding iShares Treasury Bond or generate 1.81% return on investment over 90 days.

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

iShares Treasury Bond  vs.  HSBC ETFs Public

iShares Treasury Bond

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Treasury Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Treasury 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

Very Weak

Over the last 90 days HSBC ETFs Public has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with IShares Treasury and HSBC ETFs

The main advantage of trading using opposite IShares Treasury and HSBC ETFs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Treasury 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 iShares Treasury Bond 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.