Correlation Between HSBC Holdings and Ares Management
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Ares Management 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 Holdings and Ares Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC Holdings plc and Ares Management, you can compare the effects of market volatilities on HSBC Holdings and Ares Management 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 Holdings with a short position of Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Ares Management.
Diversification Opportunities for HSBC Holdings and Ares Management
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HSBC and Ares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Ares Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management and HSBC Holdings 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 Holdings plc are associated (or correlated) with Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Ares Management go up and down completely randomly.
Pair Corralation between HSBC Holdings and Ares Management
Assuming the 90 days trading horizon HSBC Holdings is expected to generate 1.31 times less return on investment than Ares Management. In addition to that, HSBC Holdings is 1.02 times more volatile than Ares Management. It trades about 0.07 of its total potential returns per unit of risk. Ares Management is currently generating about 0.1 per unit of volatility. If you would invest 11,190 in Ares Management on November 4, 2024 and sell it today you would earn a total of 361.00 from holding Ares Management or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings plc vs. Ares Management
Performance |
| Timeline |
| HSBC Holdings plc |
| Ares Management |
HSBC Holdings and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Ares Management
The main advantage of trading using opposite HSBC Holdings and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Ares Management 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 Ares Management will offset losses from the drop in Ares Management's long position.| HSBC Holdings vs. Lloyds Banking Group | HSBC Holdings vs. Mitsubishi UFJ Financial | HSBC Holdings vs. Melco Resorts Entertainment | HSBC Holdings vs. Capital One Financial |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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