Correlation Between WisdomTree Short and HSBC FTSE

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

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

Diversification Opportunities for WisdomTree Short and HSBC FTSE

-0.72

Correlation Coefficient

WisdomTree Short  HSBC FTSE

Pay attention - limited upside

The 3 months correlation between WisdomTree and HSBC is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Short GBP and HSBC FTSE EPRA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC FTSE EPRA and WisdomTree Short 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 WisdomTree Short GBP are associated (or correlated) with HSBC FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC FTSE EPRA has no effect on the direction of WisdomTree Short i.e., WisdomTree Short and HSBC FTSE go up and down completely randomly.

Pair Corralation between WisdomTree Short and HSBC FTSE

Assuming the 90 days trading horizon WisdomTree Short GBP is expected to generate 0.65 times more return on investment than HSBC FTSE. However, WisdomTree Short GBP is 1.55 times less risky than HSBC FTSE. It trades about 0.14 of its potential returns per unit of risk. HSBC FTSE EPRA is currently generating about 0.04 per unit of risk. If you would invest  5,913  in WisdomTree Short GBP on September 3, 2024 and sell it today you would earn a total of  231.00  from holding WisdomTree Short GBP or generate 3.91% return on investment over 90 days.

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

WisdomTree Short GBP  vs.  HSBC FTSE EPRA

WisdomTree Short GBP

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Short GBP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, WisdomTree Short is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

HSBC FTSE EPRA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC FTSE EPRA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with WisdomTree Short and HSBC FTSE

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

The idea behind WisdomTree Short GBP and HSBC FTSE EPRA 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.