Correlation Between HSBC MSCI and Vanguard USD
Can any of the company-specific risk be diversified away by investing in both HSBC MSCI and Vanguard USD 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 MSCI and Vanguard USD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC MSCI Indonesia and Vanguard USD Corporate, you can compare the effects of market volatilities on HSBC MSCI and Vanguard USD 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 MSCI with a short position of Vanguard USD. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and Vanguard USD.
Diversification Opportunities for HSBC MSCI and Vanguard USD
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HSBC and Vanguard is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI Indonesia and Vanguard USD Corporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard USD Corporate and HSBC MSCI 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 MSCI Indonesia are associated (or correlated) with Vanguard USD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard USD Corporate has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and Vanguard USD go up and down completely randomly.
Pair Corralation between HSBC MSCI and Vanguard USD
Assuming the 90 days trading horizon HSBC MSCI Indonesia is expected to under-perform the Vanguard USD. In addition to that, HSBC MSCI is 4.38 times more volatile than Vanguard USD Corporate. It trades about -0.02 of its total potential returns per unit of risk. Vanguard USD Corporate is currently generating about 0.0 per unit of volatility. If you would invest 4,226 in Vanguard USD Corporate on September 2, 2024 and sell it today you would lose (12.00) from holding Vanguard USD Corporate or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 77.87% |
| Values | Daily Returns |
HSBC MSCI Indonesia vs. Vanguard USD Corporate
Performance |
| Timeline |
| HSBC MSCI Indonesia |
| Vanguard USD Corporate |
HSBC MSCI and Vanguard USD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC MSCI and Vanguard USD
The main advantage of trading using opposite HSBC MSCI and Vanguard USD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC MSCI position performs unexpectedly, Vanguard USD 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 Vanguard USD will offset losses from the drop in Vanguard USD's long position.| HSBC MSCI vs. HSBC USA SUSTAINABLE | HSBC MSCI vs. HSBC MSCI Europe | HSBC MSCI vs. HSBC EMERGING MARKET | HSBC MSCI vs. HSBC MSCI Japan |
| Vanguard USD vs. Vanguard FTSE Emerging | Vanguard USD vs. Vanguard USD Emerging | Vanguard USD vs. Vanguard FTSE Developed | Vanguard USD vs. Vanguard FTSE 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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