Correlation Between UBS Group and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both UBS Group 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 UBS Group and HSBC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS Group AG and HSBC Holdings PLC, you can compare the effects of market volatilities on UBS Group 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 UBS Group with a short position of HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Group and HSBC Holdings.
Diversification Opportunities for UBS Group and HSBC Holdings
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between UBS and HSBC is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group AG 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 UBS Group 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 UBS Group AG 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 UBS Group i.e., UBS Group and HSBC Holdings go up and down completely randomly.
Pair Corralation between UBS Group and HSBC Holdings
Considering the 90-day investment horizon UBS Group is expected to generate 1.02 times less return on investment than HSBC Holdings. In addition to that, UBS Group is 1.23 times more volatile than HSBC Holdings PLC. It trades about 0.07 of its total potential returns per unit of risk. HSBC Holdings PLC is currently generating about 0.09 per unit of volatility. If you would invest 3,417 in HSBC Holdings PLC on March 28, 2025 and sell it today you would earn a total of 2,655 from holding HSBC Holdings PLC or generate 77.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS Group AG vs. HSBC Holdings PLC
Performance |
| Timeline |
| UBS Group AG |
| HSBC Holdings PLC |
UBS Group and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS Group and HSBC Holdings
The main advantage of trading using opposite UBS Group and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Group 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.| UBS Group vs. Citigroup | UBS Group vs. Barclays PLC ADR | UBS Group vs. HSBC Holdings PLC | UBS Group vs. Nu Holdings |
| HSBC Holdings vs. ING Group NV | HSBC Holdings vs. Natwest Group PLC | HSBC Holdings vs. Banco Santander SA | HSBC Holdings vs. UBS Group AG |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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