Correlation Between HSBC Holdings and First Majestic
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and First Majestic 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 First Majestic 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 First Majestic Silver, you can compare the effects of market volatilities on HSBC Holdings and First Majestic 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 First Majestic. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and First Majestic.
Diversification Opportunities for HSBC Holdings and First Majestic
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HSBC and First is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and First Majestic Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Majestic Silver 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 First Majestic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Majestic Silver has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and First Majestic go up and down completely randomly.
Pair Corralation between HSBC Holdings and First Majestic
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.3 times more return on investment than First Majestic. However, HSBC Holdings plc is 3.28 times less risky than First Majestic. It trades about 0.26 of its potential returns per unit of risk. First Majestic Silver is currently generating about 0.0 per unit of risk. If you would invest 4,700 in HSBC Holdings plc on November 5, 2024 and sell it today you would earn a total of 300.00 from holding HSBC Holdings plc or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings plc vs. First Majestic Silver
Performance |
| Timeline |
| HSBC Holdings plc |
| First Majestic Silver |
HSBC Holdings and First Majestic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and First Majestic
The main advantage of trading using opposite HSBC Holdings and First Majestic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, First Majestic 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 First Majestic will offset losses from the drop in First Majestic's long position.| HSBC Holdings vs. OAKTRSPECLENDNEW | HSBC Holdings vs. PEPTONIC MEDICAL | HSBC Holdings vs. Medical Properties Trust | HSBC Holdings vs. Direct Line Insurance |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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