Correlation Between Visa and HSBC MSCI
Can any of the company-specific risk be diversified away by investing in both Visa 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 Visa and HSBC MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and HSBC MSCI USA, you can compare the effects of market volatilities on Visa 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 Visa with a short position of HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and HSBC MSCI.
Diversification Opportunities for Visa and HSBC MSCI
Poor diversification
The 3 months correlation between Visa and HSBC is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A 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 Visa 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 Visa Class A 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 Visa i.e., Visa and HSBC MSCI go up and down completely randomly.
Pair Corralation between Visa and HSBC MSCI
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.34 times more return on investment than HSBC MSCI. However, Visa is 1.34 times more volatile than HSBC MSCI USA. It trades about 0.1 of its potential returns per unit of risk. HSBC MSCI USA is currently generating about 0.08 per unit of risk. If you would invest 27,343 in Visa Class A on September 3, 2024 and sell it today you would earn a total of 4,165 from holding Visa Class A or generate 15.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.43% |
| Values | Daily Returns |
Visa Class A vs. HSBC MSCI USA
Performance |
| Timeline |
| Visa Class A |
| HSBC MSCI USA |
Visa and HSBC MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and HSBC MSCI
The main advantage of trading using opposite Visa and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa 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.| Visa vs. American Express | Visa vs. Capital One Financial | Visa vs. Upstart Holdings | Visa vs. Ally Financial |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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