Correlation Between HSBC DEVELOPED and HSBC MSCI
Can any of the company-specific risk be diversified away by investing in both HSBC DEVELOPED 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 DEVELOPED 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 DEVELOPED WORLD and HSBC MSCI Europe, you can compare the effects of market volatilities on HSBC DEVELOPED 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 DEVELOPED with a short position of HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC DEVELOPED and HSBC MSCI.
Diversification Opportunities for HSBC DEVELOPED and HSBC MSCI
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HSBC and HSBC is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding HSBC DEVELOPED WORLD and HSBC MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC MSCI Europe and HSBC DEVELOPED 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 DEVELOPED WORLD 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 Europe has no effect on the direction of HSBC DEVELOPED i.e., HSBC DEVELOPED and HSBC MSCI go up and down completely randomly.
Pair Corralation between HSBC DEVELOPED and HSBC MSCI
Assuming the 90 days trading horizon HSBC DEVELOPED WORLD is expected to generate 0.68 times more return on investment than HSBC MSCI. However, HSBC DEVELOPED WORLD is 1.47 times less risky than HSBC MSCI. It trades about 0.32 of its potential returns per unit of risk. HSBC MSCI Europe is currently generating about 0.2 per unit of risk. If you would invest 2,470 in HSBC DEVELOPED WORLD on November 27, 2024 and sell it today you would earn a total of 89.00 from holding HSBC DEVELOPED WORLD or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC DEVELOPED WORLD vs. HSBC MSCI Europe
Performance |
| Timeline |
| HSBC DEVELOPED WORLD |
| HSBC MSCI Europe |
HSBC DEVELOPED and HSBC MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC DEVELOPED and HSBC MSCI
The main advantage of trading using opposite HSBC DEVELOPED and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC DEVELOPED 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 DEVELOPED vs. HSBC USA SUSTAINABLE | HSBC DEVELOPED vs. HSBC MSCI Europe | HSBC DEVELOPED vs. HSBC EMERGING MARKET | HSBC DEVELOPED vs. HSBC MSCI Japan |
| HSBC MSCI vs. HSBC USA SUSTAINABLE | HSBC MSCI vs. HSBC EMERGING MARKET | HSBC MSCI vs. HSBC MSCI Japan | HSBC MSCI vs. HSBC DEVELOPED WORLD |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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