Correlation Between Regions Financial and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Regions Financial 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 Regions Financial and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regions Financial and HSBC Holdings plc, you can compare the effects of market volatilities on Regions Financial 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 Regions Financial with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regions Financial and HSBC Holdings.
Diversification Opportunities for Regions Financial and HSBC Holdings
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Regions and HSBC is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Regions Financial 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 Regions 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 Regions Financial 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 Regions Financial i.e., Regions Financial and HSBC Holdings go up and down completely randomly.
Pair Corralation between Regions Financial and HSBC Holdings
Assuming the 90 days horizon Regions Financial is expected to generate 1.63 times less return on investment than HSBC Holdings. In addition to that, Regions Financial is 1.17 times more volatile than HSBC Holdings plc. It trades about 0.04 of its total potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.08 per unit of volatility. If you would invest 2,432 in HSBC Holdings plc on September 12, 2024 and sell it today you would earn a total of 2,148 from holding HSBC Holdings plc or generate 88.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regions Financial vs. HSBC Holdings plc
Performance |
| Timeline |
| Regions Financial |
| HSBC Holdings plc |
Regions Financial and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regions Financial and HSBC Holdings
The main advantage of trading using opposite Regions Financial and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regions Financial 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.| Regions Financial vs. Fifth Third Bancorp | Regions Financial vs. Superior Plus Corp | Regions Financial vs. SIVERS SEMICONDUCTORS AB | Regions Financial vs. CHINA HUARONG ENERHD 50 |
| HSBC Holdings vs. SOUTHWEST AIRLINES | HSBC Holdings vs. Nok Airlines PCL | HSBC Holdings vs. Regions Financial | HSBC Holdings vs. ALIOR BANK |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |