Correlation Between HSBC Holdings and PepsiCo
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and PepsiCo 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 PepsiCo 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 PepsiCo, you can compare the effects of market volatilities on HSBC Holdings and PepsiCo 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 PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and PepsiCo.
Diversification Opportunities for HSBC Holdings and PepsiCo
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HSBC and PepsiCo is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo 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 PepsiCo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PepsiCo has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and PepsiCo go up and down completely randomly.
Pair Corralation between HSBC Holdings and PepsiCo
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 0.14 times more return on investment than PepsiCo. However, HSBC Holdings plc is 7.0 times less risky than PepsiCo. It trades about 0.22 of its potential returns per unit of risk. PepsiCo is currently generating about -0.01 per unit of risk. If you would invest 92,494 in HSBC Holdings plc on September 4, 2024 and sell it today you would earn a total of 1,006 from holding HSBC Holdings plc or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
HSBC Holdings plc vs. PepsiCo
Performance |
| Timeline |
| HSBC Holdings plc |
| PepsiCo |
HSBC Holdings and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and PepsiCo
The main advantage of trading using opposite HSBC Holdings and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, PepsiCo 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 PepsiCo will offset losses from the drop in PepsiCo's long position.| HSBC Holdings vs. United States Steel | HSBC Holdings vs. FIBRA Storage | HSBC Holdings vs. Micron Technology | HSBC Holdings vs. Delta Air Lines |
| PepsiCo vs. Grupo Carso SAB | PepsiCo vs. McEwen Mining | PepsiCo vs. Cognizant Technology Solutions | PepsiCo vs. Costco Wholesale |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |