Correlation Between Vanguard and HSBC MSCI
Can any of the company-specific risk be diversified away by investing in both Vanguard 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 Vanguard and HSBC MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP 500 and HSBC MSCI USA, you can compare the effects of market volatilities on Vanguard 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 Vanguard with a short position of HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and HSBC MSCI.
Diversification Opportunities for Vanguard and HSBC MSCI
Almost no diversification
The 3 months correlation between Vanguard and HSBC is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 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 Vanguard 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 Vanguard SP 500 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 Vanguard i.e., Vanguard and HSBC MSCI go up and down completely randomly.
Pair Corralation between Vanguard and HSBC MSCI
Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 1.08 times more return on investment than HSBC MSCI. However, Vanguard is 1.08 times more volatile than HSBC MSCI USA. It trades about 0.13 of its potential returns per unit of risk. HSBC MSCI USA is currently generating about 0.07 per unit of risk. If you would invest 7,631 in Vanguard SP 500 on September 4, 2024 and sell it today you would earn a total of 2,553 from holding Vanguard SP 500 or generate 33.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard SP 500 vs. HSBC MSCI USA
Performance |
| Timeline |
| Vanguard SP 500 |
| HSBC MSCI USA |
Vanguard and HSBC MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and HSBC MSCI
The main advantage of trading using opposite Vanguard and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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.| Vanguard vs. Vanguard FTSE Emerging | Vanguard vs. Vanguard USD Emerging | Vanguard vs. Vanguard FTSE Developed | Vanguard vs. Vanguard FTSE Japan |
| HSBC MSCI vs. UBSFund Solutions MSCI | HSBC MSCI vs. Vanguard SP 500 | HSBC MSCI vs. iShares VII PLC | HSBC MSCI 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 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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