Correlation Between HSBC MSCI and Lyxor UCITS
Can any of the company-specific risk be diversified away by investing in both HSBC MSCI and Lyxor UCITS 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 Lyxor UCITS 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 Lyxor UCITS Japan, you can compare the effects of market volatilities on HSBC MSCI and Lyxor UCITS 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 Lyxor UCITS. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and Lyxor UCITS.
Diversification Opportunities for HSBC MSCI and Lyxor UCITS
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HSBC and Lyxor is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI World and Lyxor UCITS Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor UCITS Japan 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 Lyxor UCITS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor UCITS Japan has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and Lyxor UCITS go up and down completely randomly.
Pair Corralation between HSBC MSCI and Lyxor UCITS
Assuming the 90 days trading horizon HSBC MSCI World is expected to generate 0.7 times more return on investment than Lyxor UCITS. However, HSBC MSCI World is 1.43 times less risky than Lyxor UCITS. It trades about 0.3 of its potential returns per unit of risk. Lyxor UCITS Japan is currently generating about 0.11 per unit of risk. If you would invest 3,533 in HSBC MSCI World on September 20, 2024 and sell it today you would earn a total of 122.00 from holding HSBC MSCI World or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC MSCI World vs. Lyxor UCITS Japan
Performance |
| Timeline |
| HSBC MSCI World |
| Lyxor UCITS Japan |
HSBC MSCI and Lyxor UCITS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC MSCI and Lyxor UCITS
The main advantage of trading using opposite HSBC MSCI and Lyxor UCITS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC MSCI position performs unexpectedly, Lyxor UCITS 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 Lyxor UCITS will offset losses from the drop in Lyxor UCITS's long position.| HSBC MSCI vs. Lyxor UCITS Japan | HSBC MSCI vs. Lyxor UCITS Japan | HSBC MSCI vs. Lyxor UCITS Stoxx | HSBC MSCI vs. Gold Bullion Securities |
| Lyxor UCITS vs. Lyxor UCITS Japan | Lyxor UCITS vs. Lyxor UCITS Stoxx | Lyxor UCITS vs. Gold Bullion Securities | Lyxor UCITS vs. SSgA SPDR ETFs |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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