Correlation Between HSBC Holdings and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Treasury Wine 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 Treasury Wine 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 Treasury Wine Estates, you can compare the effects of market volatilities on HSBC Holdings and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Treasury Wine.
Diversification Opportunities for HSBC Holdings and Treasury Wine
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between HSBC and Treasury is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Treasury Wine go up and down completely randomly.
Pair Corralation between HSBC Holdings and Treasury Wine
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.75 times more return on investment than Treasury Wine. However, HSBC Holdings plc is 1.34 times less risky than Treasury Wine. It trades about 0.25 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.12 per unit of risk. If you would invest 4,680 in HSBC Holdings plc on November 9, 2024 and sell it today you would earn a total of 280.00 from holding HSBC Holdings plc or generate 5.98% 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. Treasury Wine Estates
Performance |
| Timeline |
| HSBC Holdings plc |
| Treasury Wine Estates |
HSBC Holdings and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Treasury Wine
The main advantage of trading using opposite HSBC Holdings and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.| HSBC Holdings vs. PSI Software AG | HSBC Holdings vs. Constellation Software | HSBC Holdings vs. FORMPIPE SOFTWARE AB | HSBC Holdings vs. Alfa Financial Software |
| Treasury Wine vs. Fukuyama Transporting Co | Treasury Wine vs. Yuexiu Transport Infrastructure | Treasury Wine vs. Universal Health Realty | Treasury Wine vs. Cardinal Health |
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 Stocks Directory module to find actively traded stocks across global markets.
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