Correlation Between HSBC Holdings and N1WG34
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and N1WG34 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 N1WG34 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 N1WG34, you can compare the effects of market volatilities on HSBC Holdings and N1WG34 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 N1WG34. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and N1WG34.
Diversification Opportunities for HSBC Holdings and N1WG34
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HSBC and N1WG34 is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and N1WG34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N1WG34 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 N1WG34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N1WG34 has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and N1WG34 go up and down completely randomly.
Pair Corralation between HSBC Holdings and N1WG34
Assuming the 90 days trading horizon HSBC Holdings is expected to generate 1.12 times less return on investment than N1WG34. In addition to that, HSBC Holdings is 1.16 times more volatile than N1WG34. It trades about 0.08 of its total potential returns per unit of risk. N1WG34 is currently generating about 0.1 per unit of volatility. If you would invest 3,114 in N1WG34 on September 19, 2024 and sell it today you would earn a total of 3,168 from holding N1WG34 or generate 101.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
HSBC Holdings plc vs. N1WG34
Performance |
| Timeline |
| HSBC Holdings plc |
| N1WG34 |
HSBC Holdings and N1WG34 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and N1WG34
The main advantage of trading using opposite HSBC Holdings and N1WG34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, N1WG34 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 N1WG34 will offset losses from the drop in N1WG34's long position.| HSBC Holdings vs. Wells Fargo | HSBC Holdings vs. Barclays PLC | HSBC Holdings vs. BTG Pactual Logstica | HSBC Holdings vs. Plano Plano Desenvolvimento |
| N1WG34 vs. HSBC Holdings plc | N1WG34 vs. Wells Fargo | N1WG34 vs. Barclays PLC | N1WG34 vs. BTG Pactual Logstica |
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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