Correlation Between Warner Music and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Warner Music 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 Warner Music and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warner Music Group and HSBC Holdings plc, you can compare the effects of market volatilities on Warner Music 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 Warner Music with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and HSBC Holdings.
Diversification Opportunities for Warner Music and HSBC Holdings
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Warner and HSBC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group 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 Warner Music 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 Warner Music Group 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 Warner Music i.e., Warner Music and HSBC Holdings go up and down completely randomly.
Pair Corralation between Warner Music and HSBC Holdings
If you would invest 2,986 in Warner Music Group on November 3, 2024 and sell it today you would earn a total of 29.00 from holding Warner Music Group or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Warner Music Group vs. HSBC Holdings plc
Performance |
| Timeline |
| Warner Music Group |
| HSBC Holdings plc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Warner Music and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and HSBC Holdings
The main advantage of trading using opposite Warner Music and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music 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.| Warner Music vs. Autohome ADR | Warner Music vs. INVITATION HOMES DL | Warner Music vs. MEDICAL FACILITIES NEW | Warner Music vs. ADDUS HOMECARE |
| HSBC Holdings vs. Laureate Education | HSBC Holdings vs. American Public Education | HSBC Holdings vs. LG Display Co | HSBC Holdings vs. DeVry Education 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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