Correlation Between HSBC Holdings and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both HSBC Holdings and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs Group, you can compare the effects of market volatilities on HSBC Holdings and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of HSBC Holdings and Goldman Sachs.
Diversification Opportunities for HSBC Holdings and Goldman Sachs
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HSBC and Goldman is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding HSBC Holdings PLC and Goldman Sachs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Group 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Group has no effect on the direction of HSBC Holdings i.e., HSBC Holdings and Goldman Sachs go up and down completely randomly.
Pair Corralation between HSBC Holdings and Goldman Sachs
Given the investment horizon of 90 days HSBC Holdings is expected to generate 3.41 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, HSBC Holdings PLC is 1.12 times less risky than Goldman Sachs. It trades about 0.04 of its potential returns per unit of risk. Goldman Sachs Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 78,086 in Goldman Sachs Group on September 11, 2025 and sell it today you would earn a total of 9,572 from holding Goldman Sachs Group or generate 12.26% 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. Goldman Sachs Group
Performance |
| Timeline |
| HSBC Holdings PLC |
| Goldman Sachs Group |
HSBC Holdings and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HSBC Holdings and Goldman Sachs
The main advantage of trading using opposite HSBC Holdings and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HSBC Holdings position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| HSBC Holdings vs. Bank of America | HSBC Holdings vs. Putnam Focused Large | HSBC Holdings vs. Alcoa Corp | HSBC Holdings vs. Procter Gamble |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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