Correlation Between HSBC USA and HSBC MSCI
Can any of the company-specific risk be diversified away by investing in both HSBC USA 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 USA 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 USA Sustainable and HSBC MSCI China, you can compare the effects of market volatilities on HSBC USA 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 USA with a short position of HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC USA and HSBC MSCI.
Diversification Opportunities for HSBC USA and HSBC MSCI
Poor diversification
The 3 months correlation between HSBC and HSBC is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding HSBC USA Sustainable and HSBC MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC MSCI China and HSBC USA 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 USA Sustainable 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 China has no effect on the direction of HSBC USA i.e., HSBC USA and HSBC MSCI go up and down completely randomly.
Pair Corralation between HSBC USA and HSBC MSCI
Assuming the 90 days trading horizon HSBC USA Sustainable is expected to generate 0.62 times more return on investment than HSBC MSCI. However, HSBC USA Sustainable is 1.61 times less risky than HSBC MSCI. It trades about 0.07 of its potential returns per unit of risk. HSBC MSCI China is currently generating about 0.01 per unit of risk. If you would invest 2,096 in HSBC USA Sustainable on August 24, 2024 and sell it today you would earn a total of 862.00 from holding HSBC USA Sustainable or generate 41.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC USA Sustainable vs. HSBC MSCI China
Performance |
| Timeline |
| HSBC USA Sustainable |
| HSBC MSCI China |
HSBC USA and HSBC MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC USA and HSBC MSCI
The main advantage of trading using opposite HSBC USA and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC USA 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 USA vs. HSBC Multi Factor | HSBC USA vs. HSBC MSCI China | HSBC USA vs. HSBC Emerging Market | HSBC USA vs. HSBC MSCI Japan |
| HSBC MSCI vs. HSBC Multi Factor | HSBC MSCI vs. HSBC Emerging Market | HSBC MSCI vs. HSBC USA Sustainable | HSBC MSCI vs. HSBC MSCI Japan |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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