Correlation Between HSBC Holdings and National Bank

Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and National Bank 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 National Bank 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 National Bank of, you can compare the effects of market volatilities on HSBC Holdings and National Bank 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 National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and National Bank.

Diversification Opportunities for HSBC Holdings and National Bank

-0.74

Correlation Coefficient

HSBC Holdings  National Bank

Pay attention - limited upside

The 3 months correlation between HSBC and National is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings plc and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and National Bank go up and down completely randomly.

Pair Corralation between HSBC Holdings and National Bank

Assuming the 90 days trading horizon HSBC Holdings plc is expected to generate 1.5 times more return on investment than National Bank. However, HSBC Holdings is 1.5 times more volatile than National Bank of. It trades about 0.19 of its potential returns per unit of risk. National Bank of is currently generating about -0.19 per unit of risk. If you would invest  902.00  in HSBC Holdings plc on December 21, 2024 and sell it today you would earn a total of  184.00  from holding HSBC Holdings plc or generate 20.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

HSBC Holdings plc  vs.  National Bank of

HSBC Holdings plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HSBC Holdings plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, HSBC Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

National Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with HSBC Holdings and National Bank

The main advantage of trading using opposite HSBC Holdings and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.

The idea behind HSBC Holdings plc and National Bank of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.