Correlation Between IShares VII and HSBC MSCI
Can any of the company-specific risk be diversified away by investing in both IShares VII 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 IShares VII and HSBC MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares VII PLC and HSBC MSCI Taiwan, you can compare the effects of market volatilities on IShares VII 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 IShares VII with a short position of HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and HSBC MSCI.
Diversification Opportunities for IShares VII and HSBC MSCI
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and HSBC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII PLC and HSBC MSCI Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC MSCI Taiwan and IShares VII 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 iShares VII PLC 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 Taiwan has no effect on the direction of IShares VII i.e., IShares VII and HSBC MSCI go up and down completely randomly.
Pair Corralation between IShares VII and HSBC MSCI
Assuming the 90 days trading horizon iShares VII PLC is expected to generate 1.08 times more return on investment than HSBC MSCI. However, IShares VII is 1.08 times more volatile than HSBC MSCI Taiwan. It trades about -0.06 of its potential returns per unit of risk. HSBC MSCI Taiwan is currently generating about -0.13 per unit of risk. If you would invest 3,875,000 in iShares VII PLC on September 1, 2024 and sell it today you would lose (71,000) from holding iShares VII PLC or give up 1.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
iShares VII PLC vs. HSBC MSCI Taiwan
Performance |
| Timeline |
| iShares VII PLC |
| HSBC MSCI Taiwan |
IShares VII and HSBC MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares VII and HSBC MSCI
The main advantage of trading using opposite IShares VII and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares VII 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.| IShares VII vs. iShares Corp Bond | IShares VII vs. iShares Emerging Asia | IShares VII vs. iShares MSCI Global | IShares VII vs. iShares VII PLC |
| HSBC MSCI vs. HSBC USA SUSTAINABLE | HSBC MSCI vs. HSBC MSCI Europe | HSBC MSCI vs. HSBC EMERGING MARKET | HSBC MSCI vs. HSBC MSCI Japan |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |