Correlation Between HSBC MSCI and Legal General
Can any of the company-specific risk be diversified away by investing in both HSBC MSCI and Legal General 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 MSCI and Legal General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC MSCI Japan and Legal General UCITS, you can compare the effects of market volatilities on HSBC MSCI and Legal General 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 MSCI with a short position of Legal General. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and Legal General.
Diversification Opportunities for HSBC MSCI and Legal General
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HSBC and Legal is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI Japan and Legal General UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General UCITS and HSBC MSCI 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 MSCI Japan are associated (or correlated) with Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General UCITS has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and Legal General go up and down completely randomly.
Pair Corralation between HSBC MSCI and Legal General
Assuming the 90 days trading horizon HSBC MSCI is expected to generate 1.38 times less return on investment than Legal General. But when comparing it to its historical volatility, HSBC MSCI Japan is 1.22 times less risky than Legal General. It trades about 0.12 of its potential returns per unit of risk. Legal General UCITS is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,462 in Legal General UCITS on September 12, 2024 and sell it today you would earn a total of 148.00 from holding Legal General UCITS or generate 10.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC MSCI Japan vs. Legal General UCITS
Performance |
| Timeline |
| HSBC MSCI Japan |
| Legal General UCITS |
HSBC MSCI and Legal General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC MSCI and Legal General
The main advantage of trading using opposite HSBC MSCI and Legal General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC MSCI position performs unexpectedly, Legal General 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 Legal General will offset losses from the drop in Legal General's long position.| HSBC MSCI vs. Lyxor UCITS Japan | HSBC MSCI vs. Lyxor UCITS Japan | HSBC MSCI vs. Lyxor UCITS Stoxx | HSBC MSCI vs. Amundi CAC 40 |
| Legal General vs. Legal General UCITS | Legal General vs. iShares III Public | Legal General vs. iShares Core MSCI | Legal General vs. iShares France Govt |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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