Correlation Between IShares MSCI and HSBC MSCI
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and HSBC 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 IShares MSCI and HSBC MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI USA and HSBC MSCI USA, you can compare the effects of market volatilities on IShares MSCI and HSBC 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 IShares MSCI with a short position of HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and HSBC MSCI.
Diversification Opportunities for IShares MSCI and HSBC MSCI
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and HSBC is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI USA and HSBC MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC MSCI USA and IShares 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 iShares MSCI USA are associated (or correlated) with HSBC MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC MSCI USA has no effect on the direction of IShares MSCI i.e., IShares MSCI and HSBC MSCI go up and down completely randomly.
Pair Corralation between IShares MSCI and HSBC MSCI
Assuming the 90 days trading horizon iShares MSCI USA is expected to generate 0.99 times more return on investment than HSBC MSCI. However, iShares MSCI USA is 1.01 times less risky than HSBC MSCI. It trades about 0.17 of its potential returns per unit of risk. HSBC MSCI USA is currently generating about 0.15 per unit of risk. If you would invest 677.00 in iShares MSCI USA on November 2, 2024 and sell it today you would earn a total of 110.00 from holding iShares MSCI USA or generate 16.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.06% |
| Values | Daily Returns |
iShares MSCI USA vs. HSBC MSCI USA
Performance |
| Timeline |
| iShares MSCI USA |
| HSBC MSCI USA |
IShares MSCI and HSBC MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and HSBC MSCI
The main advantage of trading using opposite IShares MSCI and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, HSBC 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 HSBC MSCI will offset losses from the drop in HSBC MSCI's long position.| IShares MSCI vs. Lyxor UCITS Japan | IShares MSCI vs. Lyxor UCITS Japan | IShares MSCI vs. Lyxor UCITS Stoxx | IShares MSCI vs. Amundi CAC 40 |
| HSBC MSCI vs. Lyxor UCITS Japan | HSBC MSCI vs. Lyxor UCITS Japan | HSBC MSCI vs. Lyxor UCITS Stoxx | HSBC MSCI vs. Amundi CAC 40 |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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