Correlation Between HSBC Holdings and JPMorgan Chase
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and JPMorgan Chase 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 JPMorgan Chase 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 JPMorgan Chase Co, you can compare the effects of market volatilities on HSBC Holdings and JPMorgan Chase 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 JPMorgan Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and JPMorgan Chase.
Diversification Opportunities for HSBC Holdings and JPMorgan Chase
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HSBC and JPMorgan is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings PLC and JPMorgan Chase Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JPMorgan Chase 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 JPMorgan Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JPMorgan Chase has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and JPMorgan Chase go up and down completely randomly.
Pair Corralation between HSBC Holdings and JPMorgan Chase
Given the investment horizon of 90 days HSBC Holdings PLC is expected to generate 1.8 times more return on investment than JPMorgan Chase. However, HSBC Holdings is 1.8 times more volatile than JPMorgan Chase Co. It trades about 0.06 of its potential returns per unit of risk. JPMorgan Chase Co is currently generating about 0.05 per unit of risk. If you would invest 3,681 in HSBC Holdings PLC on August 26, 2024 and sell it today you would earn a total of 913.00 from holding HSBC Holdings PLC or generate 24.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HSBC Holdings PLC vs. JPMorgan Chase Co
Performance |
| Timeline |
| HSBC Holdings PLC |
| JPMorgan Chase |
HSBC Holdings and JPMorgan Chase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and JPMorgan Chase
The main advantage of trading using opposite HSBC Holdings and JPMorgan Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, JPMorgan Chase 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 JPMorgan Chase will offset losses from the drop in JPMorgan Chase'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 |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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