Correlation Between NYSE Composite and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and HSBC Holdings PLC, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and HSBC Holdings.
Diversification Opportunities for NYSE Composite and HSBC Holdings
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and HSBC is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and HSBC Holdings go up and down completely randomly.
Pair Corralation between NYSE Composite and HSBC Holdings
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.11 times less return on investment than HSBC Holdings. But when comparing it to its historical volatility, NYSE Composite is 2.27 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 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,420 in HSBC Holdings PLC on August 26, 2024 and sell it today you would earn a total of 174.00 from holding HSBC Holdings PLC or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. HSBC Holdings PLC
Performance |
| Timeline |
NYSE Composite and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
HSBC Holdings PLC
Pair trading matchups for HSBC Holdings
Pair Trading with NYSE Composite and HSBC Holdings
The main advantage of trading using opposite NYSE Composite and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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