Correlation Between HSBC MSCI and Bank of Nova Scotia

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

By analyzing existing cross correlation between HSBC MSCI Indonesia and The Bank of, you can compare the effects of market volatilities on HSBC MSCI and Bank of Nova Scotia 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 Bank of Nova Scotia. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and Bank of Nova Scotia.

Diversification Opportunities for HSBC MSCI and Bank of Nova Scotia

-0.62

Correlation Coefficient

HSBC MSCI  Bank of Nova Scotia

Excellent diversification

The 3 months correlation between HSBC and Bank is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI Indonesia and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Nova Scotia 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 Indonesia are associated (or correlated) with Bank of Nova Scotia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Nova Scotia has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and Bank of Nova Scotia go up and down completely randomly.

Pair Corralation between HSBC MSCI and Bank of Nova Scotia

Assuming the 90 days trading horizon HSBC MSCI Indonesia is expected to under-perform the Bank of Nova Scotia. But the etf apears to be less risky and, when comparing its historical volatility, HSBC MSCI Indonesia is 1.06 times less risky than Bank of Nova Scotia. The etf trades about -0.09 of its potential returns per unit of risk. The The Bank of is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  4,928  in The Bank of on October 7, 2024 and sell it today you would earn a total of  296.00  from holding The Bank of or generate 6.01% return on investment over 90 days.

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

HSBC MSCI Indonesia  vs.  The Bank of

HSBC MSCI Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HSBC MSCI Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, HSBC MSCI is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Bank of Nova Scotia

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Bank of Nova Scotia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with HSBC MSCI and Bank of Nova Scotia

The main advantage of trading using opposite HSBC MSCI and Bank of Nova Scotia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC MSCI position performs unexpectedly, Bank of Nova Scotia 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 Bank of Nova Scotia will offset losses from the drop in Bank of Nova Scotia's long position.

The idea behind HSBC MSCI Indonesia and The Bank of 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..