Correlation Between UBS and Barclays Capital

Can any of the company-specific risk be diversified away by investing in both UBS and Barclays Capital 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 and Barclays Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UBS and Barclays Capital, you can compare the effects of market volatilities on UBS and Barclays Capital 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 with a short position of Barclays Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS and Barclays Capital.

Diversification Opportunities for UBS and Barclays Capital

0.0

Correlation Coefficient

UBS  Barclays Capital

Pay attention - limited upside

The 3 months correlation between UBS and Barclays is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding UBS and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital and UBS 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 are associated (or correlated) with Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of UBS i.e., UBS and Barclays Capital go up and down completely randomly.

Pair Corralation between UBS and Barclays Capital

If you would invest (100.00) in Barclays Capital on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Barclays Capital or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

UBS  vs.  Barclays Capital

UBS

Risk-Adjusted Performance

Very Weak

Over the last 90 days UBS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, UBS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Barclays Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barclays Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Barclays Capital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with UBS and Barclays Capital

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

The idea behind UBS and Barclays Capital 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.