Correlation Between HSBC SP and GraniteShares

Can any of the company-specific risk be diversified away by investing in both HSBC SP 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 SP and GraniteShares 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 GraniteShares 3x Long, you can compare the effects of market volatilities on HSBC SP 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 SP with a short position of GraniteShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC SP and GraniteShares.

Diversification Opportunities for HSBC SP and GraniteShares

0.86

Correlation Coefficient

HSBC SP  GraniteShares

Very poor diversification

The 3 months correlation between HSBC and GraniteShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding HSBC SP 500 and GraniteShares 3x Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares 3x Long 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 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 Long has no effect on the direction of HSBC SP i.e., HSBC SP and GraniteShares go up and down completely randomly.

Pair Corralation between HSBC SP and GraniteShares

Assuming the 90 days trading horizon HSBC SP is expected to generate 7.11 times less return on investment than GraniteShares. But when comparing it to its historical volatility, HSBC SP 500 is 10.27 times less risky than GraniteShares. It trades about 0.26 of its potential returns per unit of risk. GraniteShares 3x Long is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,740,000  in GraniteShares 3x Long on April 24, 2025 and sell it today you would earn a total of  2,860,000  from holding GraniteShares 3x Long or generate 104.38% return on investment over 90 days.

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

HSBC SP 500  vs.  GraniteShares 3x Long

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.

GraniteShares 3x Long

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 3x Long are ranked lower than 14 (%) 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 SP and GraniteShares

The main advantage of trading using opposite HSBC SP and GraniteShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC SP 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 SP 500 and GraniteShares 3x Long 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.