Correlation Between HSBC EMERGING and IShares Core
Can any of the company-specific risk be diversified away by investing in both HSBC EMERGING and IShares Core 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 IShares Core 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 iShares Core SP, you can compare the effects of market volatilities on HSBC EMERGING and IShares Core 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 IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC EMERGING and IShares Core.
Diversification Opportunities for HSBC EMERGING and IShares Core
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HSBC and IShares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding HSBC EMERGING MARKET and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP 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 IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core SP has no effect on the direction of HSBC EMERGING i.e., HSBC EMERGING and IShares Core go up and down completely randomly.
Pair Corralation between HSBC EMERGING and IShares Core
Assuming the 90 days trading horizon HSBC EMERGING is expected to generate 2.07 times less return on investment than IShares Core. In addition to that, HSBC EMERGING is 1.23 times more volatile than iShares Core SP. It trades about 0.05 of its total potential returns per unit of risk. iShares Core SP is currently generating about 0.12 per unit of volatility. If you would invest 40,170 in iShares Core SP on December 1, 2024 and sell it today you would earn a total of 22,360 from holding iShares Core SP or generate 55.66% 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. iShares Core SP
Performance |
| Timeline |
| HSBC EMERGING MARKET |
| iShares Core SP |
HSBC EMERGING and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC EMERGING and IShares Core
The main advantage of trading using opposite HSBC EMERGING and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC EMERGING position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.| HSBC EMERGING vs. HSBC USA SUSTAINABLE | HSBC EMERGING vs. HSBC MSCI Europe | HSBC EMERGING vs. HSBC MSCI Japan | HSBC EMERGING vs. HSBC DEVELOPED WORLD |
| IShares Core vs. iShares Corp Bond | IShares Core vs. iShares Emerging Asia | IShares Core vs. iShares MSCI Global | IShares Core vs. iShares VII PLC |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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