Correlation Between HSBC MSCI and HSBC FTSE
Can any of the company-specific risk be diversified away by investing in both HSBC MSCI and HSBC FTSE 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 FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC MSCI Pacific and HSBC FTSE EPRA, you can compare the effects of market volatilities on HSBC MSCI and HSBC FTSE 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 FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and HSBC FTSE.
Diversification Opportunities for HSBC MSCI and HSBC FTSE
Very poor diversification
The 3 months correlation between HSBC and HSBC is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI Pacific and HSBC FTSE EPRA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC FTSE EPRA 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 Pacific are associated (or correlated) with HSBC FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC FTSE EPRA has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and HSBC FTSE go up and down completely randomly.
Pair Corralation between HSBC MSCI and HSBC FTSE
Assuming the 90 days trading horizon HSBC MSCI is expected to generate 4.72 times less return on investment than HSBC FTSE. In addition to that, HSBC MSCI is 1.15 times more volatile than HSBC FTSE EPRA. It trades about 0.03 of its total potential returns per unit of risk. HSBC FTSE EPRA is currently generating about 0.14 per unit of volatility. If you would invest 2,551 in HSBC FTSE EPRA on November 28, 2024 and sell it today you would earn a total of 51.00 from holding HSBC FTSE EPRA or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC MSCI Pacific vs. HSBC FTSE EPRA
Performance |
| Timeline |
| HSBC MSCI Pacific |
| HSBC FTSE EPRA |
HSBC MSCI and HSBC FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC MSCI and HSBC FTSE
The main advantage of trading using opposite HSBC MSCI and HSBC FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC MSCI position performs unexpectedly, HSBC FTSE 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 FTSE will offset losses from the drop in HSBC FTSE's long position.| HSBC MSCI vs. HSBC FTSE EPRA | HSBC MSCI vs. HSBC SP 500 | HSBC MSCI vs. HSBC MSCI Emerging | HSBC MSCI vs. HSBC NASDAQ Global |
| HSBC FTSE vs. HSBC SP 500 | HSBC FTSE vs. HSBC MSCI Emerging | HSBC FTSE vs. HSBC NASDAQ Global | HSBC FTSE vs. HSBC MSCI USA |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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