Correlation Between Barclays Capital and United States

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

By analyzing existing cross correlation between Barclays Capital and United States 12, you can compare the effects of market volatilities on Barclays Capital and United States 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 Barclays Capital with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays Capital and United States.

Diversification Opportunities for Barclays Capital and United States

-0.24

Correlation Coefficient

Barclays Capital  United States

Very good diversification

The 3 months correlation between Barclays and United is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Barclays Capital and United States 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States 12 and Barclays Capital 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 Barclays Capital are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States 12 has no effect on the direction of Barclays Capital i.e., Barclays Capital and United States go up and down completely randomly.

Pair Corralation between Barclays Capital and United States

If you would invest  736.00  in United States 12 on October 11, 2024 and sell it today you would earn a total of  92.00  from holding United States 12 or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	9.52%
Values	Daily Returns

Barclays Capital  vs.  United States 12

Barclays Capital

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, Barclays Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

United States 12

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United States 12 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, United States may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Barclays Capital and United States

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

The idea behind Barclays Capital and United States 12 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.