Correlation Between Lyxor Japan and HSBC MSCI
Can any of the company-specific risk be diversified away by investing in both Lyxor Japan 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 Lyxor Japan and HSBC MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor Japan UCITS and HSBC MSCI Taiwan, you can compare the effects of market volatilities on Lyxor Japan 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 Lyxor Japan with a short position of HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor Japan and HSBC MSCI.
Diversification Opportunities for Lyxor Japan and HSBC MSCI
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lyxor and HSBC is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor Japan UCITS and HSBC MSCI Taiwan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC MSCI Taiwan and Lyxor Japan 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 Lyxor Japan UCITS 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 Taiwan has no effect on the direction of Lyxor Japan i.e., Lyxor Japan and HSBC MSCI go up and down completely randomly.
Pair Corralation between Lyxor Japan and HSBC MSCI
Assuming the 90 days trading horizon Lyxor Japan UCITS is expected to generate 0.73 times more return on investment than HSBC MSCI. However, Lyxor Japan UCITS is 1.36 times less risky than HSBC MSCI. It trades about 0.04 of its potential returns per unit of risk. HSBC MSCI Taiwan is currently generating about -0.13 per unit of risk. If you would invest 2,585,500 in Lyxor Japan UCITS on September 1, 2024 and sell it today you would earn a total of 19,500 from holding Lyxor Japan UCITS or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lyxor Japan UCITS vs. HSBC MSCI Taiwan
Performance |
| Timeline |
| Lyxor Japan UCITS |
| HSBC MSCI Taiwan |
Lyxor Japan and HSBC MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor Japan and HSBC MSCI
The main advantage of trading using opposite Lyxor Japan and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor Japan 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.| Lyxor Japan vs. Lyxor Japan UCITS | Lyxor Japan vs. Lyxor Euro Government | Lyxor Japan vs. Lyxor MSCI China |
| HSBC MSCI vs. HSBC USA SUSTAINABLE | HSBC MSCI vs. HSBC MSCI Europe | HSBC MSCI vs. HSBC EMERGING MARKET | 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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