Correlation Between Lyxor BofAML and HSBC MSCI
Can any of the company-specific risk be diversified away by investing in both Lyxor BofAML 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 Lyxor BofAML and HSBC MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lyxor BofAML High and HSBC MSCI USA, you can compare the effects of market volatilities on Lyxor BofAML 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 Lyxor BofAML with a short position of HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyxor BofAML and HSBC MSCI.
Diversification Opportunities for Lyxor BofAML and HSBC MSCI
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lyxor and HSBC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lyxor BofAML High 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 Lyxor BofAML 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 Lyxor BofAML High 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 Lyxor BofAML i.e., Lyxor BofAML and HSBC MSCI go up and down completely randomly.
Pair Corralation between Lyxor BofAML and HSBC MSCI
Assuming the 90 days trading horizon Lyxor BofAML High is expected to generate 0.89 times more return on investment than HSBC MSCI. However, Lyxor BofAML High is 1.12 times less risky than HSBC MSCI. It trades about 0.18 of its potential returns per unit of risk. HSBC MSCI USA is currently generating about 0.05 per unit of risk. If you would invest 8,952 in Lyxor BofAML High on October 20, 2024 and sell it today you would earn a total of 194.00 from holding Lyxor BofAML High or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lyxor BofAML High vs. HSBC MSCI USA
Performance |
| Timeline |
| Lyxor BofAML High |
| HSBC MSCI USA |
Lyxor BofAML and HSBC MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lyxor BofAML and HSBC MSCI
The main advantage of trading using opposite Lyxor BofAML and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyxor BofAML 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.| Lyxor BofAML vs. Lyxor UCITS Japan | Lyxor BofAML vs. Lyxor UCITS Japan | Lyxor BofAML vs. Lyxor UCITS Stoxx | Lyxor BofAML 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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