Correlation Between HSBC MSCI and IShares SP
Can any of the company-specific risk be diversified away by investing in both HSBC MSCI and IShares 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 IShares 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 iShares SP 500, you can compare the effects of market volatilities on HSBC MSCI and IShares 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 IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and IShares SP.
Diversification Opportunities for HSBC MSCI and IShares SP
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HSBC and IShares is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI Japan and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 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 IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and IShares SP go up and down completely randomly.
Pair Corralation between HSBC MSCI and IShares SP
Assuming the 90 days trading horizon HSBC MSCI is expected to generate 1.08 times less return on investment than IShares SP. In addition to that, HSBC MSCI is 1.41 times more volatile than iShares SP 500. It trades about 0.11 of its total potential returns per unit of risk. iShares SP 500 is currently generating about 0.17 per unit of volatility. If you would invest 5,622 in iShares SP 500 on September 12, 2024 and sell it today you would earn a total of 128.00 from holding iShares SP 500 or generate 2.28% 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. iShares SP 500
Performance |
| Timeline |
| HSBC MSCI Japan |
| iShares SP 500 |
HSBC MSCI and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC MSCI and IShares SP
The main advantage of trading using opposite HSBC MSCI and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC MSCI position performs unexpectedly, IShares 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 IShares SP will offset losses from the drop in IShares SP'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 SP vs. SPDR Dow Jones | IShares SP vs. iShares Core MSCI | IShares SP vs. Vanguard FTSE All World | IShares SP vs. iShares Core 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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