Correlation Between HSBC MSCI and Dow Jones
Can any of the company-specific risk be diversified away by investing in both HSBC MSCI and Dow Jones 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 HSBC MSCI and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC MSCI World and Dow Jones Industrial, you can compare the effects of market volatilities on HSBC MSCI and Dow Jones 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 HSBC MSCI with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and Dow Jones.
Diversification Opportunities for HSBC MSCI and Dow Jones
Almost no diversification
The 3 months correlation between HSBC and Dow is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI World and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and HSBC 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 HSBC MSCI World are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and Dow Jones go up and down completely randomly.
Pair Corralation between HSBC MSCI and Dow Jones
Assuming the 90 days trading horizon HSBC MSCI World is expected to generate 0.99 times more return on investment than Dow Jones. However, HSBC MSCI World is 1.01 times less risky than Dow Jones. It trades about 0.13 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.11 per unit of risk. If you would invest 2,596 in HSBC MSCI World on September 19, 2024 and sell it today you would earn a total of 1,049 from holding HSBC MSCI World or generate 40.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.76% |
| Values | Daily Returns |
HSBC MSCI World vs. Dow Jones Industrial
Performance |
| Timeline |
HSBC MSCI and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
HSBC MSCI World
Pair trading matchups for HSBC MSCI
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with HSBC MSCI and Dow Jones
The main advantage of trading using opposite HSBC MSCI and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC MSCI position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| HSBC MSCI vs. HSBC MSCI China | HSBC MSCI vs. HSBC Emerging Market | HSBC MSCI vs. HSBC USA Sustainable | HSBC MSCI vs. HSBC MSCI Japan |
| Dow Jones vs. Mangazeya Mining | Dow Jones vs. Summit Materials | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. AMCON Distributing |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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