Correlation Between HSBC MSCI and HSBC EMERGING
Can any of the company-specific risk be diversified away by investing in both HSBC MSCI 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 HSBC MSCI and HSBC EMERGING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC MSCI Europe and HSBC EMERGING MARKET, you can compare the effects of market volatilities on HSBC MSCI 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 HSBC MSCI with a short position of HSBC EMERGING. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and HSBC EMERGING.
Diversification Opportunities for HSBC MSCI and HSBC EMERGING
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between HSBC and HSBC is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI Europe 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 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 Europe 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 HSBC MSCI i.e., HSBC MSCI and HSBC EMERGING go up and down completely randomly.
Pair Corralation between HSBC MSCI and HSBC EMERGING
Assuming the 90 days trading horizon HSBC MSCI Europe is expected to under-perform the HSBC EMERGING. But the etf apears to be less risky and, when comparing its historical volatility, HSBC MSCI Europe is 1.36 times less risky than HSBC EMERGING. The etf trades about -0.31 of its potential returns per unit of risk. The HSBC EMERGING MARKET is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 1,591 in HSBC EMERGING MARKET on August 29, 2024 and sell it today you would lose (65.00) from holding HSBC EMERGING MARKET or give up 4.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
HSBC MSCI Europe vs. HSBC EMERGING MARKET
Performance |
| Timeline |
| HSBC MSCI Europe |
| HSBC EMERGING MARKET |
HSBC MSCI and HSBC EMERGING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC MSCI and HSBC EMERGING
The main advantage of trading using opposite HSBC MSCI and HSBC EMERGING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC MSCI 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.| HSBC MSCI vs. HSBC USA SUSTAINABLE | HSBC MSCI vs. HSBC EMERGING MARKET | HSBC MSCI vs. HSBC MSCI Japan | HSBC MSCI vs. HSBC DEVELOPED WORLD |
| 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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