Correlation Between HSBC SP and SPDR MSCI
Can any of the company-specific risk be diversified away by investing in both HSBC SP and SPDR 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 HSBC SP and SPDR MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC SP 500 and SPDR MSCI Europe, you can compare the effects of market volatilities on HSBC SP and SPDR 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 HSBC SP with a short position of SPDR MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC SP and SPDR MSCI.
Diversification Opportunities for HSBC SP and SPDR MSCI
Very good diversification
The 3 months correlation between HSBC and SPDR is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding HSBC SP 500 and SPDR MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI Europe and HSBC SP 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 HSBC SP 500 are associated (or correlated) with SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI Europe has no effect on the direction of HSBC SP i.e., HSBC SP and SPDR MSCI go up and down completely randomly.
Pair Corralation between HSBC SP and SPDR MSCI
Assuming the 90 days trading horizon HSBC SP 500 is expected to generate 1.19 times more return on investment than SPDR MSCI. However, HSBC SP is 1.19 times more volatile than SPDR MSCI Europe. It trades about 0.21 of its potential returns per unit of risk. SPDR MSCI Europe is currently generating about 0.01 per unit of risk. If you would invest 5,454 in HSBC SP 500 on August 30, 2024 and sell it today you would earn a total of 313.00 from holding HSBC SP 500 or generate 5.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC SP 500 vs. SPDR MSCI Europe
Performance |
| Timeline |
| HSBC SP 500 |
| SPDR MSCI Europe |
HSBC SP and SPDR MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC SP and SPDR MSCI
The main advantage of trading using opposite HSBC SP and SPDR MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC SP position performs unexpectedly, SPDR 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 SPDR MSCI will offset losses from the drop in SPDR MSCI's long position.| HSBC SP vs. Manitou BF SA | HSBC SP vs. Ossiam Minimum Variance | HSBC SP vs. Ekinops SA | HSBC SP vs. Orapi SA |
| SPDR MSCI vs. SPDR MSCI Europe | SPDR MSCI vs. SPDR MSCI Europe | SPDR MSCI vs. SPDR Barclays Cap | SPDR MSCI vs. SPDR SP 500 |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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