Correlation Between HSBC Holdings and Marstons PLC
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Marstons PLC 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 HSBC Holdings and Marstons PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HSBC Holdings PLC and Marstons PLC, you can compare the effects of market volatilities on HSBC Holdings and Marstons PLC 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 HSBC Holdings with a short position of Marstons PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Marstons PLC.
Diversification Opportunities for HSBC Holdings and Marstons PLC
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between HSBC and Marstons is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings PLC and Marstons PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marstons PLC and HSBC Holdings 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 HSBC Holdings PLC are associated (or correlated) with Marstons PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marstons PLC has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Marstons PLC go up and down completely randomly.
Pair Corralation between HSBC Holdings and Marstons PLC
Assuming the 90 days trading horizon HSBC Holdings PLC is expected to generate 0.42 times more return on investment than Marstons PLC. However, HSBC Holdings PLC is 2.38 times less risky than Marstons PLC. It trades about 0.22 of its potential returns per unit of risk. Marstons PLC is currently generating about 0.07 per unit of risk. If you would invest 65,661 in HSBC Holdings PLC on September 25, 2024 and sell it today you would earn a total of 10,849 from holding HSBC Holdings PLC or generate 16.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.46% |
Values | Daily Returns |
HSBC Holdings PLC vs. Marstons PLC
Performance |
Timeline |
HSBC Holdings PLC |
Marstons PLC |
HSBC Holdings and Marstons PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HSBC Holdings and Marstons PLC
The main advantage of trading using opposite HSBC Holdings and Marstons PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Marstons PLC 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 Marstons PLC will offset losses from the drop in Marstons PLC's long position.HSBC Holdings vs. Samsung Electronics Co | HSBC Holdings vs. Samsung Electronics Co | HSBC Holdings vs. Hyundai Motor | HSBC Holdings vs. Toyota Motor Corp |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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