Correlation Between First Republic and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both First Republic 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 First Republic and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Republic Bank and HSBC Holdings plc, you can compare the effects of market volatilities on First Republic 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 First Republic with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Republic and HSBC Holdings.
Diversification Opportunities for First Republic and HSBC Holdings
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and HSBC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Republic Bank 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 First Republic 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 First Republic Bank 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 First Republic i.e., First Republic and HSBC Holdings go up and down completely randomly.
Pair Corralation between First Republic and HSBC Holdings
If you would invest 76,171 in HSBC Holdings plc on August 28, 2024 and sell it today you would earn a total of 17,329 from holding HSBC Holdings plc or generate 22.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Republic Bank vs. HSBC Holdings plc
Performance |
| Timeline |
| First Republic Bank |
| HSBC Holdings plc |
First Republic and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Republic and HSBC Holdings
The main advantage of trading using opposite First Republic and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Republic 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.| First Republic vs. First Majestic Silver | First Republic vs. Ameriprise Financial | First Republic vs. McEwen Mining | First Republic vs. Lloyds Banking Group |
| HSBC Holdings vs. Ross Stores | HSBC Holdings vs. DXC Technology | HSBC Holdings vs. Verizon Communications | HSBC Holdings vs. First Republic Bank |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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