Correlation Between HSBC Holdings and Marathon Petroleum
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Marathon Petroleum 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 Marathon Petroleum 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 Marathon Petroleum, you can compare the effects of market volatilities on HSBC Holdings and Marathon Petroleum 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 Marathon Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Marathon Petroleum.
Diversification Opportunities for HSBC Holdings and Marathon Petroleum
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HSBC and Marathon is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Marathon Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marathon Petroleum 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 Marathon Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marathon Petroleum has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Marathon Petroleum go up and down completely randomly.
Pair Corralation between HSBC Holdings and Marathon Petroleum
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.71 times more return on investment than Marathon Petroleum. However, HSBC Holdings plc is 1.4 times less risky than Marathon Petroleum. It trades about 0.19 of its potential returns per unit of risk. Marathon Petroleum is currently generating about 0.08 per unit of risk. If you would invest 6,606 in HSBC Holdings plc on August 31, 2024 and sell it today you would earn a total of 334.00 from holding HSBC Holdings plc or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings plc vs. Marathon Petroleum
Performance |
| Timeline |
| HSBC Holdings plc |
| Marathon Petroleum |
HSBC Holdings and Marathon Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Marathon Petroleum
The main advantage of trading using opposite HSBC Holdings and Marathon Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Marathon Petroleum 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 Marathon Petroleum will offset losses from the drop in Marathon Petroleum's long position.| HSBC Holdings vs. Unifique Telecomunicaes SA | HSBC Holdings vs. Charter Communications | HSBC Holdings vs. G2D Investments | HSBC Holdings vs. Taiwan Semiconductor Manufacturing |
| Marathon Petroleum vs. Charter Communications | Marathon Petroleum vs. Tres Tentos Agroindustrial | Marathon Petroleum vs. METISA Metalrgica Timboense | Marathon Petroleum vs. Mangels Industrial SA |
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 CEOs Directory module to screen CEOs from public companies around the world.
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