Correlation Between HSBC SP and HSBC MSCI
Can any of the company-specific risk be diversified away by investing in both HSBC SP and HSBC MSCI 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 SP and HSBC MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC SP 500 and HSBC MSCI USA, you can compare the effects of market volatilities on HSBC SP and HSBC MSCI 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 SP with a short position of HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC SP and HSBC MSCI.
Diversification Opportunities for HSBC SP and HSBC MSCI
Very weak diversification
The 3 months correlation between HSBC and HSBC is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding HSBC SP 500 and HSBC MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC MSCI USA and HSBC SP 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 SP 500 are associated (or correlated) with HSBC MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC MSCI USA has no effect on the direction of HSBC SP i.e., HSBC SP and HSBC MSCI go up and down completely randomly.
Pair Corralation between HSBC SP and HSBC MSCI
Assuming the 90 days trading horizon HSBC SP is expected to generate 1.09 times less return on investment than HSBC MSCI. But when comparing it to its historical volatility, HSBC SP 500 is 1.21 times less risky than HSBC MSCI. It trades about 0.29 of its potential returns per unit of risk. HSBC MSCI USA is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,391 in HSBC MSCI USA on August 26, 2024 and sell it today you would earn a total of 154.00 from holding HSBC MSCI USA or generate 6.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC SP 500 vs. HSBC MSCI USA
Performance |
| Timeline |
| HSBC SP 500 |
| HSBC MSCI USA |
HSBC SP and HSBC MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC SP and HSBC MSCI
The main advantage of trading using opposite HSBC SP and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC SP position performs unexpectedly, HSBC MSCI 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 MSCI will offset losses from the drop in HSBC MSCI's long position.| HSBC SP vs. Leverage Shares 3x | HSBC SP vs. Leverage Shares 3x | HSBC SP vs. Leverage Shares 3x | HSBC SP vs. WisdomTree Short GBP |
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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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