Correlation Between HSBC Holdings and Bath Body
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Bath Body 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 Bath Body 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 Bath Body Works, you can compare the effects of market volatilities on HSBC Holdings and Bath Body 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 Bath Body. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Bath Body.
Diversification Opportunities for HSBC Holdings and Bath Body
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HSBC and Bath is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings PLC and Bath Body Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bath Body Works 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 Bath Body. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bath Body Works has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Bath Body go up and down completely randomly.
Pair Corralation between HSBC Holdings and Bath Body
Assuming the 90 days trading horizon HSBC Holdings PLC is expected to generate 0.41 times more return on investment than Bath Body. However, HSBC Holdings PLC is 2.43 times less risky than Bath Body. It trades about 0.09 of its potential returns per unit of risk. Bath Body Works is currently generating about 0.01 per unit of risk. If you would invest 66,816 in HSBC Holdings PLC on September 24, 2024 and sell it today you would earn a total of 9,264 from holding HSBC Holdings PLC or generate 13.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings PLC vs. Bath Body Works
Performance |
| Timeline |
| HSBC Holdings PLC |
| Bath Body Works |
HSBC Holdings and Bath Body Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Bath Body
The main advantage of trading using opposite HSBC Holdings and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Bath Body 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 Bath Body will offset losses from the drop in Bath Body's long position.| HSBC Holdings vs. Oxford Technology 2 | HSBC Holdings vs. The Mercantile Investment | HSBC Holdings vs. Odyssean Investment Trust | HSBC Holdings vs. Albion Technology General |
| Bath Body vs. Uniper SE | Bath Body vs. Mulberry Group PLC | Bath Body vs. London Security Plc | Bath Body vs. Triad Group PLC |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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