Correlation Between IShares Core and HSBC EMERGING
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 IShares Core and HSBC EMERGING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and HSBC EMERGING MARKET, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of HSBC EMERGING. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and HSBC EMERGING.
Diversification Opportunities for IShares Core and HSBC EMERGING
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and HSBC is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI 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 IShares Core 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 Core MSCI 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 IShares Core i.e., IShares Core and HSBC EMERGING go up and down completely randomly.
Pair Corralation between IShares Core and HSBC EMERGING
Assuming the 90 days trading horizon IShares Core is expected to generate 1.01 times less return on investment than HSBC EMERGING. In addition to that, IShares Core is 1.09 times more volatile than HSBC EMERGING MARKET. It trades about 0.04 of its total potential returns per unit of risk. HSBC EMERGING MARKET is currently generating about 0.05 per unit of volatility. If you would invest 1,282 in HSBC EMERGING MARKET on August 29, 2024 and sell it today you would earn a total of 256.00 from holding HSBC EMERGING MARKET or generate 19.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. HSBC EMERGING MARKET
Performance |
| Timeline |
| iShares Core MSCI |
| HSBC EMERGING MARKET |
IShares Core and HSBC EMERGING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and HSBC EMERGING
The main advantage of trading using opposite IShares Core and HSBC EMERGING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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.| IShares Core vs. UBSFund Solutions MSCI | IShares Core vs. iShares Core SP | IShares Core vs. Baloise Holding AG | IShares Core vs. Autoneum Holding AG |
| HSBC EMERGING vs. HSBC USA SUSTAINABLE | HSBC EMERGING vs. HSBC MSCI Europe | HSBC EMERGING vs. HSBC MSCI Japan | HSBC EMERGING vs. HSBC DEVELOPED WORLD |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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