Correlation Between HSBC MSCI and HSBC SP
Can any of the company-specific risk be diversified away by investing in both HSBC MSCI and HSBC SP 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 HSBC SP 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 HSBC SP 500, you can compare the effects of market volatilities on HSBC MSCI and HSBC SP 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 HSBC SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and HSBC SP.
Diversification Opportunities for HSBC MSCI and HSBC SP
Weak diversification
The 3 months correlation between HSBC and HSBC is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI Japan and HSBC SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC SP 500 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 HSBC SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC SP 500 has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and HSBC SP go up and down completely randomly.
Pair Corralation between HSBC MSCI and HSBC SP
Assuming the 90 days trading horizon HSBC MSCI is expected to generate 4.49 times less return on investment than HSBC SP. In addition to that, HSBC MSCI is 1.46 times more volatile than HSBC SP 500. It trades about 0.03 of its total potential returns per unit of risk. HSBC SP 500 is currently generating about 0.17 per unit of volatility. If you would invest 4,834 in HSBC SP 500 on August 29, 2024 and sell it today you would earn a total of 967.00 from holding HSBC SP 500 or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC MSCI Japan vs. HSBC SP 500
Performance |
| Timeline |
| HSBC MSCI Japan |
| HSBC SP 500 |
HSBC MSCI and HSBC SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC MSCI and HSBC SP
The main advantage of trading using opposite HSBC MSCI and HSBC SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC MSCI position performs unexpectedly, HSBC SP 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 SP will offset losses from the drop in HSBC SP's long position.| HSBC MSCI vs. HSBC MSCI China | HSBC MSCI vs. HSBC Emerging Market | HSBC MSCI vs. HSBC USA Sustainable | HSBC MSCI vs. HSBC MUCPAB ETF |
| HSBC SP vs. HSBC MSCI China | HSBC SP vs. HSBC Emerging Market | HSBC SP vs. HSBC USA Sustainable | HSBC SP 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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