Correlation Between HSBC MSCI and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both HSBC MSCI and IShares 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 HSBC MSCI and IShares MSCI 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 MSCI World, you can compare the effects of market volatilities on HSBC MSCI and IShares 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 HSBC MSCI with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and IShares MSCI.
Diversification Opportunities for HSBC MSCI and IShares MSCI
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HSBC and IShares is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI Japan and iShares MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI World 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI World has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and IShares MSCI go up and down completely randomly.
Pair Corralation between HSBC MSCI and IShares MSCI
Assuming the 90 days trading horizon HSBC MSCI Japan is expected to generate 1.58 times more return on investment than IShares MSCI. However, HSBC MSCI is 1.58 times more volatile than iShares MSCI World. It trades about 0.17 of its potential returns per unit of risk. iShares MSCI World is currently generating about 0.06 per unit of risk. If you would invest 3,795 in HSBC MSCI Japan on September 12, 2024 and sell it today you would earn a total of 130.00 from holding HSBC MSCI Japan or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
HSBC MSCI Japan vs. iShares MSCI World
Performance |
| Timeline |
| HSBC MSCI Japan |
| iShares MSCI World |
HSBC MSCI and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC MSCI and IShares MSCI
The main advantage of trading using opposite HSBC MSCI and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC MSCI position performs unexpectedly, IShares 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 IShares MSCI will offset losses from the drop in IShares MSCI'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 MSCI vs. iShares III Public | IShares MSCI vs. iShares Core MSCI | IShares MSCI vs. iShares France Govt | IShares MSCI 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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