Correlation Between Scottish Mortgage and HSBC MSCI

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

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

Diversification Opportunities for Scottish Mortgage and HSBC MSCI

-0.29

Correlation Coefficient

Scottish Mortgage  HSBC MSCI

Very good diversification

The 3 months correlation between Scottish and HSBC is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Scottish Mortgage Investment 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 Scottish Mortgage 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 Scottish Mortgage Investment 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 Scottish Mortgage i.e., Scottish Mortgage and HSBC MSCI go up and down completely randomly.

Pair Corralation between Scottish Mortgage and HSBC MSCI

Assuming the 90 days trading horizon Scottish Mortgage Investment is expected to generate 1.86 times more return on investment than HSBC MSCI. However, Scottish Mortgage is 1.86 times more volatile than HSBC MSCI USA. It trades about 0.11 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  96,160  in Scottish Mortgage Investment on December 2, 2024 and sell it today you would earn a total of  8,040  from holding Scottish Mortgage Investment or generate 8.36% return on investment over 90 days.

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

Scottish Mortgage Investment  vs.  HSBC MSCI USA

Scottish Mortgage

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Scottish Mortgage 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 Scottish Mortgage and HSBC MSCI

The main advantage of trading using opposite Scottish Mortgage and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scottish Mortgage 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 Scottish Mortgage Investment 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.