Correlation Between VanEck Global and HSBC MSCI

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

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

Diversification Opportunities for VanEck Global and HSBC MSCI

0.5

Correlation Coefficient

VanEck Global  HSBC MSCI

Very weak diversification

The 3 months correlation between VanEck and HSBC is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Global Real and HSBC MSCI Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC MSCI Japan and VanEck Global 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 VanEck Global Real 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 Japan has no effect on the direction of VanEck Global i.e., VanEck Global and HSBC MSCI go up and down completely randomly.

Pair Corralation between VanEck Global and HSBC MSCI

Assuming the 90 days trading horizon VanEck Global Real is expected to generate 0.49 times more return on investment than HSBC MSCI. However, VanEck Global Real is 2.04 times less risky than HSBC MSCI. It trades about 0.34 of its potential returns per unit of risk. HSBC MSCI Japan is currently generating about -0.03 per unit of risk. If you would invest  4,015  in VanEck Global Real on December 2, 2024 and sell it today you would earn a total of  135.00  from holding VanEck Global Real or generate 3.36% return on investment over 90 days.

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

VanEck Global Real  vs.  HSBC MSCI Japan

VanEck Global Real

Risk-Adjusted Performance

Weak

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

HSBC MSCI Japan

Risk-Adjusted Performance

Very Weak

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.

Pair Trading with VanEck Global and HSBC MSCI

The main advantage of trading using opposite VanEck Global and HSBC MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Global 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 VanEck Global Real and HSBC MSCI Japan 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.