Correlation Between HSBC Holdings and Nordea Bank
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Nordea Bank 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 Nordea Bank 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 Nordea Bank Abp, you can compare the effects of market volatilities on HSBC Holdings and Nordea Bank 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 Nordea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Nordea Bank.
Diversification Opportunities for HSBC Holdings and Nordea Bank
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HSBC and Nordea is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings PLC and Nordea Bank Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea Bank Abp 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 Nordea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea Bank Abp has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Nordea Bank go up and down completely randomly.
Pair Corralation between HSBC Holdings and Nordea Bank
Assuming the 90 days trading horizon HSBC Holdings PLC is expected to generate 1.06 times more return on investment than Nordea Bank. However, HSBC Holdings is 1.06 times more volatile than Nordea Bank Abp. It trades about 0.08 of its potential returns per unit of risk. Nordea Bank Abp is currently generating about 0.04 per unit of risk. If you would invest 50,083 in HSBC Holdings PLC on October 11, 2024 and sell it today you would earn a total of 29,037 from holding HSBC Holdings PLC or generate 57.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
HSBC Holdings PLC vs. Nordea Bank Abp
Performance |
| Timeline |
| HSBC Holdings PLC |
| Nordea Bank Abp |
HSBC Holdings and Nordea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Nordea Bank
The main advantage of trading using opposite HSBC Holdings and Nordea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Nordea Bank 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 Nordea Bank will offset losses from the drop in Nordea Bank's long position.| HSBC Holdings vs. Nordea Bank Abp | HSBC Holdings vs. Naked Wines plc | HSBC Holdings vs. Virgin Wines UK | HSBC Holdings vs. Sparebank 1 SR |
| Nordea Bank vs. Alien Metals | Nordea Bank vs. Morgan Advanced Materials | Nordea Bank vs. Capital Drilling | Nordea Bank vs. Rheinmetall AG |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| CEOs Directory Screen CEOs from public companies around the world |