Correlation Between IShares JP and HSBC Hang
Can any of the company-specific risk be diversified away by investing in both IShares JP and HSBC Hang 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 IShares JP and HSBC Hang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares JP Morgan and HSBC Hang Seng, you can compare the effects of market volatilities on IShares JP and HSBC Hang 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 IShares JP with a short position of HSBC Hang. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares JP and HSBC Hang.
Diversification Opportunities for IShares JP and HSBC Hang
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between IShares and HSBC is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding iShares JP Morgan and HSBC Hang Seng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Hang Seng and IShares JP 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 iShares JP Morgan are associated (or correlated) with HSBC Hang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Hang Seng has no effect on the direction of IShares JP i.e., IShares JP and HSBC Hang go up and down completely randomly.
Pair Corralation between IShares JP and HSBC Hang
Assuming the 90 days trading horizon IShares JP is expected to generate 1.27 times less return on investment than HSBC Hang. But when comparing it to its historical volatility, iShares JP Morgan is 2.13 times less risky than HSBC Hang. It trades about 0.02 of its potential returns per unit of risk. HSBC Hang Seng is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 579.00 in HSBC Hang Seng on September 3, 2024 and sell it today you would earn a total of 9.00 from holding HSBC Hang Seng or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 86.41% |
| Values | Daily Returns |
iShares JP Morgan vs. HSBC Hang Seng
Performance |
| Timeline |
| iShares JP Morgan |
| HSBC Hang Seng |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
IShares JP and HSBC Hang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares JP and HSBC Hang
The main advantage of trading using opposite IShares JP and HSBC Hang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares JP position performs unexpectedly, HSBC Hang 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 Hang will offset losses from the drop in HSBC Hang's long position.| IShares JP vs. UBSFund Solutions MSCI | IShares JP vs. Vanguard SP 500 | IShares JP vs. iShares VII PLC | IShares JP vs. iShares Core SP |
| HSBC Hang vs. HSBC USA SUSTAINABLE | HSBC Hang vs. HSBC MSCI Europe | HSBC Hang vs. HSBC EMERGING MARKET | HSBC Hang 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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