Correlation Between HSBC Holdings and ANZ Group
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and ANZ Group 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 ANZ Group 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 ANZ Group Holdings, you can compare the effects of market volatilities on HSBC Holdings and ANZ Group 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 ANZ Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and ANZ Group.
Diversification Opportunities for HSBC Holdings and ANZ Group
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HSBC and ANZ is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings PLC and ANZ Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANZ Group Holdings 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 ANZ Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANZ Group Holdings has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and ANZ Group go up and down completely randomly.
Pair Corralation between HSBC Holdings and ANZ Group
Given the investment horizon of 90 days HSBC Holdings is expected to generate 1.05 times less return on investment than ANZ Group. In addition to that, HSBC Holdings is 1.54 times more volatile than ANZ Group Holdings. It trades about 0.14 of its total potential returns per unit of risk. ANZ Group Holdings is currently generating about 0.23 per unit of volatility. If you would invest 2,020 in ANZ Group Holdings on August 27, 2024 and sell it today you would earn a total of 88.00 from holding ANZ Group Holdings or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings PLC vs. ANZ Group Holdings
Performance |
| Timeline |
| HSBC Holdings PLC |
| ANZ Group Holdings |
HSBC Holdings and ANZ Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and ANZ Group
The main advantage of trading using opposite HSBC Holdings and ANZ Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, ANZ Group 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 ANZ Group will offset losses from the drop in ANZ Group's long position.| HSBC Holdings vs. ING Group NV | HSBC Holdings vs. Natwest Group PLC | HSBC Holdings vs. Banco Santander SA | HSBC Holdings vs. UBS Group AG |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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