Correlation Between Barclays Capital and DB Base

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

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

Diversification Opportunities for Barclays Capital and DB Base

-0.54

Correlation Coefficient

Barclays Capital  DB Base

Excellent diversification

The 3 months correlation between Barclays and BDDXF is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Barclays Capital and DB Base Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Base Metals 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 DB Base. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Base Metals has no effect on the direction of Barclays Capital i.e., Barclays Capital and DB Base go up and down completely randomly.

Pair Corralation between Barclays Capital and DB Base

Considering the 90-day investment horizon Barclays Capital is expected to generate 75.95 times more return on investment than DB Base. However, Barclays Capital is 75.95 times more volatile than DB Base Metals. It trades about 0.18 of its potential returns per unit of risk. DB Base Metals is currently generating about -0.05 per unit of risk. If you would invest  103.00  in Barclays Capital on October 11, 2024 and sell it today you would lose (102.00) from holding Barclays Capital or give up 99.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.49%
Values	Daily Returns

Barclays Capital  vs.  DB Base Metals

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. Despite nearly stable technical and fundamental indicators, Barclays Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

DB Base Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DB Base Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DB Base is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Barclays Capital and DB Base

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

The idea behind Barclays Capital and DB Base Metals 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.