Correlation Between Bank of America and HSBC MSCI
Can any of the company-specific risk be diversified away by investing in both Bank of America and HSBC MSCI 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 Bank of America and HSBC MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and HSBC MSCI Emerging, you can compare the effects of market volatilities on Bank of America and HSBC MSCI 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 Bank of America with a short position of HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and HSBC MSCI.
Diversification Opportunities for Bank of America and HSBC MSCI
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and HSBC is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and HSBC MSCI Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC MSCI Emerging and Bank of America 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 Bank of America are associated (or correlated) with HSBC MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC MSCI Emerging has no effect on the direction of Bank of America i.e., Bank of America and HSBC MSCI go up and down completely randomly.
Pair Corralation between Bank of America and HSBC MSCI
Considering the 90-day investment horizon Bank of America is expected to generate 2.29 times more return on investment than HSBC MSCI. However, Bank of America is 2.29 times more volatile than HSBC MSCI Emerging. It trades about 0.32 of its potential returns per unit of risk. HSBC MSCI Emerging is currently generating about -0.08 per unit of risk. If you would invest 4,176 in Bank of America on September 2, 2024 and sell it today you would earn a total of 575.00 from holding Bank of America or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. HSBC MSCI Emerging
Performance |
| Timeline |
| Bank of America |
| HSBC MSCI Emerging |
Bank of America and HSBC MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and HSBC MSCI
The main advantage of trading using opposite Bank of America and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, HSBC MSCI 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 MSCI will offset losses from the drop in HSBC MSCI's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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