Correlation Between HSBC MSCI and WisdomTree Issuer

Can any of the company-specific risk be diversified away by investing in both HSBC MSCI and WisdomTree Issuer 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 WisdomTree Issuer 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 WisdomTree Issuer ICAV, you can compare the effects of market volatilities on HSBC MSCI and WisdomTree Issuer 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 WisdomTree Issuer. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC MSCI and WisdomTree Issuer.

Diversification Opportunities for HSBC MSCI and WisdomTree Issuer

0.92

Correlation Coefficient

HSBC MSCI  WisdomTree Issuer

Almost no diversification

The 3 months correlation between HSBC and WisdomTree is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding HSBC MSCI USA and WisdomTree Issuer ICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Issuer ICAV 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 WisdomTree Issuer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Issuer ICAV has no effect on the direction of HSBC MSCI i.e., HSBC MSCI and WisdomTree Issuer go up and down completely randomly.

Pair Corralation between HSBC MSCI and WisdomTree Issuer

Assuming the 90 days trading horizon HSBC MSCI USA is expected to generate 1.08 times more return on investment than WisdomTree Issuer. However, HSBC MSCI is 1.08 times more volatile than WisdomTree Issuer ICAV. It trades about 0.29 of its potential returns per unit of risk. WisdomTree Issuer ICAV is currently generating about 0.23 per unit of risk. If you would invest  3,751  in HSBC MSCI USA on April 25, 2025 and sell it today you would earn a total of  591.00  from holding HSBC MSCI USA or generate 15.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.41%
Values	Daily Returns

HSBC MSCI USA  vs.  WisdomTree Issuer ICAV

HSBC MSCI USA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC MSCI USA are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, HSBC MSCI unveiled solid returns over the last few months and may actually be approaching a breakup point.

WisdomTree Issuer ICAV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Issuer ICAV are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WisdomTree Issuer may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with HSBC MSCI and WisdomTree Issuer

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

The idea behind HSBC MSCI USA and WisdomTree Issuer ICAV 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.