Correlation Between Jefferies Financial and HDFC Bank
Can any of the company-specific risk be diversified away by investing in both Jefferies Financial and HDFC 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 Jefferies Financial and HDFC Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jefferies Financial Group and HDFC Bank Limited, you can compare the effects of market volatilities on Jefferies Financial and HDFC 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 Jefferies Financial with a short position of HDFC Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jefferies Financial and HDFC Bank.
Diversification Opportunities for Jefferies Financial and HDFC Bank
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jefferies and HDFC is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Jefferies Financial Group and HDFC Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HDFC Bank Limited and Jefferies Financial 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 Jefferies Financial Group are associated (or correlated) with HDFC Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HDFC Bank Limited has no effect on the direction of Jefferies Financial i.e., Jefferies Financial and HDFC Bank go up and down completely randomly.
Pair Corralation between Jefferies Financial and HDFC Bank
Assuming the 90 days trading horizon Jefferies Financial Group is expected to generate 1.69 times more return on investment than HDFC Bank. However, Jefferies Financial is 1.69 times more volatile than HDFC Bank Limited. It trades about -0.04 of its potential returns per unit of risk. HDFC Bank Limited is currently generating about -0.19 per unit of risk. If you would invest 47,282 in Jefferies Financial Group on November 3, 2024 and sell it today you would lose (2,134) from holding Jefferies Financial Group or give up 4.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jefferies Financial Group vs. HDFC Bank Limited
Performance |
| Timeline |
| Jefferies Financial |
| HDFC Bank Limited |
Jefferies Financial and HDFC Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jefferies Financial and HDFC Bank
The main advantage of trading using opposite Jefferies Financial and HDFC Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jefferies Financial position performs unexpectedly, HDFC 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 HDFC Bank will offset losses from the drop in HDFC Bank's long position.| Jefferies Financial vs. Global X Funds | Jefferies Financial vs. G2D Investments | Jefferies Financial vs. Hormel Foods | Jefferies Financial vs. Academy Sports and |
| HDFC Bank vs. Charter Communications | HDFC Bank vs. Synchrony Financial | HDFC Bank vs. Lloyds Banking Group | HDFC Bank vs. Jefferies Financial Group |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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