Correlation Between HSBC SP and Rize UCITS

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

Diversification Opportunities for HSBC SP and Rize UCITS

0.87

Correlation Coefficient

HSBC SP  Rize UCITS

Very poor diversification

The 3 months correlation between HSBC and Rize is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding HSBC SP 500 and Rize UCITS ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rize UCITS ICAV 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 Rize UCITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rize UCITS ICAV has no effect on the direction of HSBC SP i.e., HSBC SP and Rize UCITS go up and down completely randomly.

Pair Corralation between HSBC SP and Rize UCITS

Assuming the 90 days trading horizon HSBC SP 500 is expected to generate 0.86 times more return on investment than Rize UCITS. However, HSBC SP 500 is 1.16 times less risky than Rize UCITS. It trades about 0.26 of its potential returns per unit of risk. Rize UCITS ICAV is currently generating about 0.21 per unit of risk. If you would invest  413,490  in HSBC SP 500 on April 24, 2025 and sell it today you would earn a total of  59,040  from holding HSBC SP 500 or generate 14.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

HSBC SP 500  vs.  Rize UCITS ICAV

HSBC SP 500

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC SP 500 are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, HSBC SP unveiled solid returns over the last few months and may actually be approaching a breakup point.

Rize UCITS ICAV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rize UCITS ICAV are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Rize UCITS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HSBC SP and Rize UCITS

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

The idea behind HSBC SP 500 and Rize UCITS ICAV 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.