Correlation Between HSBC SP and Lyxor MSCI
Can any of the company-specific risk be diversified away by investing in both HSBC SP and Lyxor 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 Lyxor 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 Lyxor MSCI World, you can compare the effects of market volatilities on HSBC SP and Lyxor 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 Lyxor MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC SP and Lyxor MSCI.
Diversification Opportunities for HSBC SP and Lyxor MSCI
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HSBC and Lyxor is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding HSBC SP 500 and Lyxor MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor MSCI World 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 Lyxor MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor MSCI World has no effect on the direction of HSBC SP i.e., HSBC SP and Lyxor MSCI go up and down completely randomly.
Pair Corralation between HSBC SP and Lyxor MSCI
Assuming the 90 days trading horizon HSBC SP 500 is expected to generate 1.58 times more return on investment than Lyxor MSCI. However, HSBC SP is 1.58 times more volatile than Lyxor MSCI World. It trades about 0.33 of its potential returns per unit of risk. Lyxor MSCI World is currently generating about 0.24 per unit of risk. If you would invest 5,356 in HSBC SP 500 on September 2, 2024 and sell it today you would earn a total of 427.00 from holding HSBC SP 500 or generate 7.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC SP 500 vs. Lyxor MSCI World
Performance |
| Timeline |
| HSBC SP 500 |
| Lyxor MSCI World |
HSBC SP and Lyxor MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC SP and Lyxor MSCI
The main advantage of trading using opposite HSBC SP and Lyxor MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC SP position performs unexpectedly, Lyxor 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 Lyxor MSCI will offset losses from the drop in Lyxor MSCI's long position.| HSBC SP vs. Manitou BF SA | HSBC SP vs. Granite 3x LVMH | HSBC SP vs. 21Shares Polkadot ETP | HSBC SP vs. Ekinops SA |
| Lyxor MSCI vs. Lyxor UCITS Japan | Lyxor MSCI vs. Lyxor UCITS Japan | Lyxor MSCI vs. Lyxor UCITS Stoxx | Lyxor MSCI vs. Amundi CAC 40 |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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