Correlation Between HSBC Holdings and Pets At
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Pets At 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 Pets At 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 Pets at Home, you can compare the effects of market volatilities on HSBC Holdings and Pets At 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 Pets At. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Pets At.
Diversification Opportunities for HSBC Holdings and Pets At
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HSBC and Pets is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home 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 Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Pets At go up and down completely randomly.
Pair Corralation between HSBC Holdings and Pets At
Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 1.0 times more return on investment than Pets At. However, HSBC Holdings is 1.0 times more volatile than Pets at Home. It trades about 0.16 of its potential returns per unit of risk. Pets at Home is currently generating about 0.08 per unit of risk. If you would invest 935.00 in HSBC Holdings plc on April 21, 2025 and sell it today you would earn a total of 149.00 from holding HSBC Holdings plc or generate 15.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
HSBC Holdings plc vs. Pets at Home
Performance |
Timeline |
HSBC Holdings plc |
Pets at Home |
HSBC Holdings and Pets At Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with HSBC Holdings and Pets At
The main advantage of trading using opposite HSBC Holdings and Pets At positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Pets At 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 Pets At will offset losses from the drop in Pets At's long position.HSBC Holdings vs. Pets at Home | HSBC Holdings vs. Beazer Homes USA | HSBC Holdings vs. NORDHEALTH AS NK | HSBC Holdings vs. Planet Fitness |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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