Correlation Between Naked Wines and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Naked Wines 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 Naked Wines and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naked Wines plc and HSBC Holdings PLC, you can compare the effects of market volatilities on Naked Wines 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 Naked Wines with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naked Wines and HSBC Holdings.
Diversification Opportunities for Naked Wines and HSBC Holdings
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Naked and HSBC is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Naked Wines plc 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 Naked Wines 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 Naked Wines plc 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 Naked Wines i.e., Naked Wines and HSBC Holdings go up and down completely randomly.
Pair Corralation between Naked Wines and HSBC Holdings
Assuming the 90 days trading horizon Naked Wines plc is expected to under-perform the HSBC Holdings. In addition to that, Naked Wines is 3.11 times more volatile than HSBC Holdings PLC. It trades about -0.09 of its total potential returns per unit of risk. HSBC Holdings PLC is currently generating about 0.35 per unit of volatility. If you would invest 68,254 in HSBC Holdings PLC on October 26, 2024 and sell it today you would earn a total of 14,676 from holding HSBC Holdings PLC or generate 21.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Naked Wines plc vs. HSBC Holdings PLC
Performance |
| Timeline |
| Naked Wines plc |
| HSBC Holdings PLC |
Naked Wines and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naked Wines and HSBC Holdings
The main advantage of trading using opposite Naked Wines and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naked Wines 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.| Naked Wines vs. Various Eateries PLC | Naked Wines vs. Nordea Bank Abp | Naked Wines vs. Ameriprise Financial | Naked Wines vs. Samsung Electronics Co |
| HSBC Holdings vs. Orient Telecoms | HSBC Holdings vs. Foresight Environmental Infrastructure | HSBC Holdings vs. Zegona Communications Plc | HSBC Holdings vs. Electronic Arts |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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