Correlation Between Benchmark Electronics and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Benchmark Electronics and HSBC Holdings 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 Benchmark Electronics and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benchmark Electronics and HSBC Holdings plc, you can compare the effects of market volatilities on Benchmark Electronics and HSBC Holdings 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 Benchmark Electronics with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benchmark Electronics and HSBC Holdings.
Diversification Opportunities for Benchmark Electronics and HSBC Holdings
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Benchmark and HSBC is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Benchmark Electronics and HSBC Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Holdings plc and Benchmark Electronics 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 Benchmark Electronics are associated (or correlated) with HSBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Holdings plc has no effect on the direction of Benchmark Electronics i.e., Benchmark Electronics and HSBC Holdings go up and down completely randomly.
Pair Corralation between Benchmark Electronics and HSBC Holdings
Assuming the 90 days horizon Benchmark Electronics is expected to under-perform the HSBC Holdings. In addition to that, Benchmark Electronics is 1.64 times more volatile than HSBC Holdings plc. It trades about -0.05 of its total potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.18 per unit of volatility. If you would invest 911.00 in HSBC Holdings plc on October 10, 2024 and sell it today you would earn a total of 32.00 from holding HSBC Holdings plc or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benchmark Electronics vs. HSBC Holdings plc
Performance |
| Timeline |
| Benchmark Electronics |
| HSBC Holdings plc |
Benchmark Electronics and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benchmark Electronics and HSBC Holdings
The main advantage of trading using opposite Benchmark Electronics and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benchmark Electronics position performs unexpectedly, HSBC Holdings 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 Holdings will offset losses from the drop in HSBC Holdings' long position.| Benchmark Electronics vs. Hisense Home Appliances | Benchmark Electronics vs. PROSIEBENSAT1 MEDIADR4 | Benchmark Electronics vs. Corporate Office Properties | Benchmark Electronics vs. Nexstar Media Group |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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