Correlation Between Scottish Mortgage and HSBC MSCI
Can any of the company-specific risk be diversified away by investing in both Scottish Mortgage 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 Scottish Mortgage and HSBC MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scottish Mortgage Investment and HSBC MSCI USA, you can compare the effects of market volatilities on Scottish Mortgage 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 Scottish Mortgage with a short position of HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scottish Mortgage and HSBC MSCI.
Diversification Opportunities for Scottish Mortgage and HSBC MSCI
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Scottish and HSBC is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Scottish Mortgage Investment 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 Scottish Mortgage 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 Scottish Mortgage Investment 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 Scottish Mortgage i.e., Scottish Mortgage and HSBC MSCI go up and down completely randomly.
Pair Corralation between Scottish Mortgage and HSBC MSCI
Assuming the 90 days trading horizon Scottish Mortgage is expected to generate 1.65 times less return on investment than HSBC MSCI. But when comparing it to its historical volatility, Scottish Mortgage Investment is 1.3 times less risky than HSBC MSCI. It trades about 0.03 of its potential returns per unit of risk. HSBC MSCI USA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,905 in HSBC MSCI USA on August 26, 2024 and sell it today you would earn a total of 640.00 from holding HSBC MSCI USA or generate 33.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Scottish Mortgage Investment vs. HSBC MSCI USA
Performance |
| Timeline |
| Scottish Mortgage |
| HSBC MSCI USA |
Scottish Mortgage and HSBC MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scottish Mortgage and HSBC MSCI
The main advantage of trading using opposite Scottish Mortgage and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scottish Mortgage 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.The idea behind Scottish Mortgage Investment and HSBC MSCI USA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| HSBC MSCI vs. Scottish Mortgage Investment | HSBC MSCI vs. CT Private Equity | HSBC MSCI vs. Aberdeen New India | HSBC MSCI vs. Invesco Health Care |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |