Correlation Between Microsoft and HSBC EMERGING
Can any of the company-specific risk be diversified away by investing in both Microsoft and HSBC EMERGING 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 Microsoft and HSBC EMERGING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and HSBC EMERGING MARKET, you can compare the effects of market volatilities on Microsoft and HSBC EMERGING 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 Microsoft with a short position of HSBC EMERGING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and HSBC EMERGING.
Diversification Opportunities for Microsoft and HSBC EMERGING
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Microsoft and HSBC is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and HSBC EMERGING MARKET in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC EMERGING MARKET and Microsoft 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 Microsoft are associated (or correlated) with HSBC EMERGING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC EMERGING MARKET has no effect on the direction of Microsoft i.e., Microsoft and HSBC EMERGING go up and down completely randomly.
Pair Corralation between Microsoft and HSBC EMERGING
Given the investment horizon of 90 days Microsoft is expected to under-perform the HSBC EMERGING. In addition to that, Microsoft is 2.19 times more volatile than HSBC EMERGING MARKET. It trades about -0.07 of its total potential returns per unit of risk. HSBC EMERGING MARKET is currently generating about 0.17 per unit of volatility. If you would invest 1,551 in HSBC EMERGING MARKET on November 22, 2024 and sell it today you would earn a total of 52.00 from holding HSBC EMERGING MARKET or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Microsoft vs. HSBC EMERGING MARKET
Performance |
| Timeline |
| Microsoft |
| HSBC EMERGING MARKET |
Microsoft and HSBC EMERGING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and HSBC EMERGING
The main advantage of trading using opposite Microsoft and HSBC EMERGING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, HSBC EMERGING 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 EMERGING will offset losses from the drop in HSBC EMERGING's long position.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Adobe Systems Incorporated | Microsoft vs. Crowdstrike Holdings |
| HSBC EMERGING vs. UBSFund Solutions MSCI | HSBC EMERGING vs. Vanguard SP 500 | HSBC EMERGING vs. iShares VII PLC | HSBC EMERGING vs. iShares Core SP |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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