Correlation Between National Australia and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both National Australia and HSBC Holdings 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 National Australia and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Australia Bank and HSBC Holdings PLC, you can compare the effects of market volatilities on National Australia and HSBC Holdings 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 National Australia with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Australia and HSBC Holdings.
Diversification Opportunities for National Australia and HSBC Holdings
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and HSBC is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and HSBC Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Holdings PLC and National Australia 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 National Australia Bank are associated (or correlated) with HSBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Holdings PLC has no effect on the direction of National Australia i.e., National Australia and HSBC Holdings go up and down completely randomly.
Pair Corralation between National Australia and HSBC Holdings
Assuming the 90 days horizon National Australia Bank is expected to generate 0.96 times more return on investment than HSBC Holdings. However, National Australia Bank is 1.04 times less risky than HSBC Holdings. It trades about 0.15 of its potential returns per unit of risk. HSBC Holdings PLC is currently generating about 0.14 per unit of risk. If you would invest 1,245 in National Australia Bank on August 27, 2024 and sell it today you would earn a total of 51.00 from holding National Australia Bank or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Australia Bank vs. HSBC Holdings PLC
Performance |
| Timeline |
| National Australia Bank |
| HSBC Holdings PLC |
National Australia and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Australia and HSBC Holdings
The main advantage of trading using opposite National Australia and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Australia position performs unexpectedly, HSBC Holdings 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 HSBC Holdings will offset losses from the drop in HSBC Holdings' long position.| National Australia vs. China Construction Bank | National Australia vs. Bank of America | National Australia vs. ANZ Group Holdings | National Australia vs. Bank of America |
| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |