Correlation Between Lyxor MSCI and HSBC Emerging
Can any of the company-specific risk be diversified away by investing in both Lyxor MSCI and HSBC Emerging 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 Lyxor MSCI and HSBC Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor MSCI China and HSBC Emerging Market, you can compare the effects of market volatilities on Lyxor MSCI and HSBC Emerging 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 Lyxor MSCI with a short position of HSBC Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor MSCI and HSBC Emerging.
Diversification Opportunities for Lyxor MSCI and HSBC Emerging
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lyxor and HSBC is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor MSCI China and HSBC Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Emerging Market and Lyxor MSCI 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 Lyxor MSCI China are associated (or correlated) with HSBC Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Emerging Market has no effect on the direction of Lyxor MSCI i.e., Lyxor MSCI and HSBC Emerging go up and down completely randomly.
Pair Corralation between Lyxor MSCI and HSBC Emerging
Assuming the 90 days trading horizon Lyxor MSCI is expected to generate 5.71 times less return on investment than HSBC Emerging. In addition to that, Lyxor MSCI is 1.77 times more volatile than HSBC Emerging Market. It trades about 0.0 of its total potential returns per unit of risk. HSBC Emerging Market is currently generating about 0.04 per unit of volatility. If you would invest 1,204 in HSBC Emerging Market on September 2, 2024 and sell it today you would earn a total of 239.00 from holding HSBC Emerging Market or generate 19.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor MSCI China vs. HSBC Emerging Market
Performance |
| Timeline |
| Lyxor MSCI China |
| HSBC Emerging Market |
Lyxor MSCI and HSBC Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor MSCI and HSBC Emerging
The main advantage of trading using opposite Lyxor MSCI and HSBC Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor MSCI position performs unexpectedly, HSBC Emerging 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 Emerging will offset losses from the drop in HSBC Emerging's long position.| Lyxor MSCI vs. Manitou BF SA | Lyxor MSCI vs. Granite 3x LVMH | Lyxor MSCI vs. 21Shares Polkadot ETP | Lyxor MSCI vs. Ekinops SA |
| HSBC Emerging vs. Manitou BF SA | HSBC Emerging vs. Granite 3x LVMH | HSBC Emerging vs. 21Shares Polkadot ETP | HSBC Emerging vs. Ekinops SA |
Check out your portfolio center.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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