Correlation Between HSBC MSCI and IShares Developed

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

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

Diversification Opportunities for HSBC MSCI and IShares Developed

0.0

Correlation Coefficient

HSBC MSCI  IShares Developed

Pay attention - limited upside

The 3 months correlation between HSBC and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI Japan and iShares Developed Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Developed Markets 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 Japan are associated (or correlated) with IShares Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Developed Markets has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and IShares Developed go up and down completely randomly.

Pair Corralation between HSBC MSCI and IShares Developed

If you would invest  2,183  in iShares Developed Markets on October 24, 2024 and sell it today you would earn a total of  26.00  from holding iShares Developed Markets or generate 1.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

HSBC MSCI Japan  vs.  iShares Developed Markets

HSBC MSCI Japan

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days HSBC MSCI Japan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HSBC MSCI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares Developed Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Developed Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Developed is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HSBC MSCI and IShares Developed

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

The idea behind HSBC MSCI Japan and iShares Developed Markets 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.