Correlation Between Grupo Sports and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Grupo Sports 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 Grupo Sports and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Sports World and HSBC Holdings plc, you can compare the effects of market volatilities on Grupo Sports 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 Grupo Sports with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Sports and HSBC Holdings.
Diversification Opportunities for Grupo Sports and HSBC Holdings
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grupo and HSBC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Sports World 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 Grupo Sports 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 Grupo Sports World 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 Grupo Sports i.e., Grupo Sports and HSBC Holdings go up and down completely randomly.
Pair Corralation between Grupo Sports and HSBC Holdings
Assuming the 90 days trading horizon Grupo Sports World is expected to generate 1.33 times more return on investment than HSBC Holdings. However, Grupo Sports is 1.33 times more volatile than HSBC Holdings plc. It trades about 0.08 of its potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.07 per unit of risk. If you would invest 300.00 in Grupo Sports World on September 2, 2024 and sell it today you would earn a total of 340.00 from holding Grupo Sports World or generate 113.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Grupo Sports World vs. HSBC Holdings plc
Performance |
| Timeline |
| Grupo Sports World |
| HSBC Holdings plc |
Grupo Sports and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Sports and HSBC Holdings
The main advantage of trading using opposite Grupo Sports and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Sports 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.| Grupo Sports vs. Monster Beverage Corp | Grupo Sports vs. DXC Technology | Grupo Sports vs. Grupo Carso SAB | Grupo Sports vs. Verizon Communications |
| HSBC Holdings vs. First Majestic Silver | HSBC Holdings vs. United States Steel | HSBC Holdings vs. Cognizant Technology Solutions | HSBC Holdings vs. Taiwan Semiconductor Manufacturing |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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