Correlation Between HSBC MSCI and Scottish Mortgage

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

By analyzing existing cross correlation between HSBC MSCI Emerging and Scottish Mortgage Investment, you can compare the effects of market volatilities on HSBC MSCI and Scottish Mortgage 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 Scottish Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and Scottish Mortgage.

Diversification Opportunities for HSBC MSCI and Scottish Mortgage

-0.48

Correlation Coefficient

HSBC MSCI  Scottish Mortgage

Very good diversification

The 3 months correlation between HSBC and Scottish is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI Emerging and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage 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 Emerging are associated (or correlated) with Scottish Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scottish Mortgage has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and Scottish Mortgage go up and down completely randomly.

Pair Corralation between HSBC MSCI and Scottish Mortgage

Assuming the 90 days trading horizon HSBC MSCI is expected to generate 1.63 times less return on investment than Scottish Mortgage. But when comparing it to its historical volatility, HSBC MSCI Emerging is 1.7 times less risky than Scottish Mortgage. It trades about 0.05 of its potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  71,567  in Scottish Mortgage Investment on September 12, 2024 and sell it today you would earn a total of  25,473  from holding Scottish Mortgage Investment or generate 35.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.4%
Values	Daily Returns

HSBC MSCI Emerging  vs.  Scottish Mortgage Investment

HSBC MSCI Emerging

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC MSCI Emerging are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, HSBC MSCI is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Scottish Mortgage

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Scottish Mortgage exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HSBC MSCI and Scottish Mortgage

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

The idea behind HSBC MSCI Emerging and Scottish Mortgage Investment 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.