Correlation Between Gold Bullion and HSBC MSCI
Can any of the company-specific risk be diversified away by investing in both Gold Bullion 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 Gold Bullion and HSBC MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Bullion Securities and HSBC MSCI World, you can compare the effects of market volatilities on Gold Bullion 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 Gold Bullion with a short position of HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Bullion and HSBC MSCI.
Diversification Opportunities for Gold Bullion and HSBC MSCI
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and HSBC is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Gold Bullion Securities and HSBC MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC MSCI World and Gold Bullion 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 Gold Bullion Securities 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 World has no effect on the direction of Gold Bullion i.e., Gold Bullion and HSBC MSCI go up and down completely randomly.
Pair Corralation between Gold Bullion and HSBC MSCI
Assuming the 90 days trading horizon Gold Bullion is expected to generate 1.72 times less return on investment than HSBC MSCI. In addition to that, Gold Bullion is 2.22 times more volatile than HSBC MSCI World. It trades about 0.07 of its total potential returns per unit of risk. HSBC MSCI World is currently generating about 0.27 per unit of volatility. If you would invest 3,537 in HSBC MSCI World on September 19, 2024 and sell it today you would earn a total of 108.00 from holding HSBC MSCI World or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Bullion Securities vs. HSBC MSCI World
Performance |
| Timeline |
| Gold Bullion Securities |
| HSBC MSCI World |
Gold Bullion and HSBC MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Bullion and HSBC MSCI
The main advantage of trading using opposite Gold Bullion and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Bullion 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.| Gold Bullion vs. Lyxor UCITS Japan | Gold Bullion vs. Lyxor UCITS Japan | Gold Bullion vs. Lyxor UCITS Stoxx | Gold Bullion vs. Amundi CAC 40 |
| HSBC MSCI vs. HSBC MSCI China | HSBC MSCI vs. HSBC Emerging Market | HSBC MSCI vs. HSBC USA Sustainable | 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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