Correlation Between HSBC MSCI and IShares Asia
Can any of the company-specific risk be diversified away by investing in both HSBC MSCI and IShares Asia 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 IShares Asia 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 iShares Asia Property, you can compare the effects of market volatilities on HSBC MSCI and IShares Asia 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 IShares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and IShares Asia.
Diversification Opportunities for HSBC MSCI and IShares Asia
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between HSBC and IShares is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI Japan and iShares Asia Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Asia Property 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 IShares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Asia Property has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and IShares Asia go up and down completely randomly.
Pair Corralation between HSBC MSCI and IShares Asia
Assuming the 90 days trading horizon HSBC MSCI Japan is expected to generate 1.45 times more return on investment than IShares Asia. However, HSBC MSCI is 1.45 times more volatile than iShares Asia Property. It trades about 0.1 of its potential returns per unit of risk. iShares Asia Property is currently generating about -0.14 per unit of risk. If you would invest 3,660 in HSBC MSCI Japan on September 12, 2024 and sell it today you would earn a total of 213.00 from holding HSBC MSCI Japan or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC MSCI Japan vs. iShares Asia Property
Performance |
| Timeline |
| HSBC MSCI Japan |
| iShares Asia Property |
HSBC MSCI and IShares Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC MSCI and IShares Asia
The main advantage of trading using opposite HSBC MSCI and IShares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC MSCI position performs unexpectedly, IShares Asia 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 IShares Asia will offset losses from the drop in IShares Asia'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 |
| IShares Asia vs. iShares III Public | IShares Asia vs. iShares Core MSCI | IShares Asia vs. iShares France Govt | IShares Asia vs. iShares Edge MSCI |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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