Correlation Between HSBC MSCI and BNP Paribas
Can any of the company-specific risk be diversified away by investing in both HSBC MSCI and BNP Paribas 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 BNP Paribas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC MSCI World and BNP Paribas Easy, you can compare the effects of market volatilities on HSBC MSCI and BNP Paribas 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 BNP Paribas. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and BNP Paribas.
Diversification Opportunities for HSBC MSCI and BNP Paribas
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HSBC and BNP is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI World and BNP Paribas Easy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas Easy 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 World are associated (or correlated) with BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas Easy has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and BNP Paribas go up and down completely randomly.
Pair Corralation between HSBC MSCI and BNP Paribas
Assuming the 90 days trading horizon HSBC MSCI is expected to generate 2.08 times less return on investment than BNP Paribas. But when comparing it to its historical volatility, HSBC MSCI World is 1.44 times less risky than BNP Paribas. It trades about 0.07 of its potential returns per unit of risk. BNP Paribas Easy is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 648.00 in BNP Paribas Easy on November 2, 2024 and sell it today you would earn a total of 17.00 from holding BNP Paribas Easy or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC MSCI World vs. BNP Paribas Easy
Performance |
| Timeline |
| HSBC MSCI World |
| BNP Paribas Easy |
HSBC MSCI and BNP Paribas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC MSCI and BNP Paribas
The main advantage of trading using opposite HSBC MSCI and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC MSCI position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' long position.| HSBC MSCI vs. HSBC MSCI China | HSBC MSCI vs. HSBC Emerging Market | HSBC MSCI vs. HSBC USA Sustainable | HSBC MSCI vs. HSBC MSCI Japan |
| BNP Paribas vs. BNP PARIBAS EASY | BNP Paribas vs. BNP Paribas Easy | BNP Paribas vs. BNP Paribas Easy | BNP Paribas vs. BNP Paribas Easy |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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