Correlation Between HSBC MSCI and HSBC NASDAQ

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

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

Diversification Opportunities for HSBC MSCI and HSBC NASDAQ

0.97

Correlation Coefficient

HSBC MSCI  HSBC NASDAQ

Almost no diversification

The 3 months correlation between HSBC and HSBC is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI USA and HSBC NASDAQ Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC NASDAQ Global 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 USA are associated (or correlated) with HSBC NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC NASDAQ Global has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and HSBC NASDAQ go up and down completely randomly.

Pair Corralation between HSBC MSCI and HSBC NASDAQ

Assuming the 90 days trading horizon HSBC MSCI USA is expected to under-perform the HSBC NASDAQ. But the etf apears to be less risky and, when comparing its historical volatility, HSBC MSCI USA is 1.17 times less risky than HSBC NASDAQ. The etf trades about -0.16 of its potential returns per unit of risk. The HSBC NASDAQ Global is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  870.00  in HSBC NASDAQ Global on December 30, 2024 and sell it today you would lose (77.00) from holding HSBC NASDAQ Global or give up 8.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

HSBC MSCI USA  vs.  HSBC NASDAQ Global

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.

HSBC NASDAQ Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days HSBC NASDAQ Global 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 HSBC MSCI and HSBC NASDAQ

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

The idea behind HSBC MSCI USA and HSBC NASDAQ Global 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.