Correlation Between BlackRock Latin and HSBC MSCI

Can any of the company-specific risk be diversified away by investing in both BlackRock Latin 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 BlackRock Latin and HSBC MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackRock Latin American and HSBC MSCI USA, you can compare the effects of market volatilities on BlackRock Latin 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 BlackRock Latin with a short position of HSBC MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Latin and HSBC MSCI.

Diversification Opportunities for BlackRock Latin and HSBC MSCI

-0.35

Correlation Coefficient

BlackRock Latin  HSBC MSCI

Very good diversification

The 3 months correlation between BlackRock and HSBC is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Latin American 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 BlackRock Latin 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 BlackRock Latin American 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 BlackRock Latin i.e., BlackRock Latin and HSBC MSCI go up and down completely randomly.

Pair Corralation between BlackRock Latin and HSBC MSCI

Assuming the 90 days trading horizon BlackRock Latin American is expected to generate 1.54 times more return on investment than HSBC MSCI. However, BlackRock Latin is 1.54 times more volatile than HSBC MSCI USA. It trades about 0.14 of its potential returns per unit of risk. HSBC MSCI USA is currently generating about -0.13 per unit of risk. If you would invest  28,112  in BlackRock Latin American on December 2, 2024 and sell it today you would earn a total of  2,588  from holding BlackRock Latin American or generate 9.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BlackRock Latin American  vs.  HSBC MSCI USA

BlackRock Latin American

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Latin American are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, BlackRock Latin may actually be approaching a critical reversion point that can send shares even higher in April 2025.

HSBC MSCI USA

Risk-Adjusted Performance

Very Weak

Over the last 90 days HSBC MSCI USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with BlackRock Latin and HSBC MSCI

The main advantage of trading using opposite BlackRock Latin and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Latin 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.

The idea behind BlackRock Latin American and HSBC MSCI USA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.