Correlation Between HSBC Emerging and HSBC MUCPAB
Can any of the company-specific risk be diversified away by investing in both HSBC Emerging and HSBC MUCPAB 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 Emerging and HSBC MUCPAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC Emerging Market and HSBC MUCPAB ETF, you can compare the effects of market volatilities on HSBC Emerging and HSBC MUCPAB 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 Emerging with a short position of HSBC MUCPAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Emerging and HSBC MUCPAB.
Diversification Opportunities for HSBC Emerging and HSBC MUCPAB
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HSBC and HSBC is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Emerging Market and HSBC MUCPAB ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC MUCPAB ETF and HSBC Emerging 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 Emerging Market are associated (or correlated) with HSBC MUCPAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC MUCPAB ETF has no effect on the direction of HSBC Emerging i.e., HSBC Emerging and HSBC MUCPAB go up and down completely randomly.
Pair Corralation between HSBC Emerging and HSBC MUCPAB
Assuming the 90 days trading horizon HSBC Emerging Market is expected to under-perform the HSBC MUCPAB. But the etf apears to be less risky and, when comparing its historical volatility, HSBC Emerging Market is 1.57 times less risky than HSBC MUCPAB. The etf trades about -0.13 of its potential returns per unit of risk. The HSBC MUCPAB ETF is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,853 in HSBC MUCPAB ETF on August 28, 2024 and sell it today you would earn a total of 233.00 from holding HSBC MUCPAB ETF or generate 6.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Emerging Market vs. HSBC MUCPAB ETF
Performance |
| Timeline |
| HSBC Emerging Market |
| HSBC MUCPAB ETF |
HSBC Emerging and HSBC MUCPAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Emerging and HSBC MUCPAB
The main advantage of trading using opposite HSBC Emerging and HSBC MUCPAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Emerging position performs unexpectedly, HSBC MUCPAB 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 MUCPAB will offset losses from the drop in HSBC MUCPAB's long position.The idea behind HSBC Emerging Market and HSBC MUCPAB ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| HSBC MUCPAB vs. Lyxor UCITS Japan | HSBC MUCPAB vs. Lyxor UCITS Japan | HSBC MUCPAB vs. Lyxor UCITS Stoxx | HSBC MUCPAB 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |