Correlation Between Banco Bilbao and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both Banco Bilbao and Barclays PLC 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 Banco Bilbao and Barclays PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banco Bilbao Vizcaya and Barclays PLC ADR, you can compare the effects of market volatilities on Banco Bilbao and Barclays PLC 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 Banco Bilbao with a short position of Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banco Bilbao and Barclays PLC.
Diversification Opportunities for Banco Bilbao and Barclays PLC
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Banco and Barclays is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Banco Bilbao Vizcaya and Barclays PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC ADR and Banco Bilbao 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 Banco Bilbao Vizcaya are associated (or correlated) with Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC ADR has no effect on the direction of Banco Bilbao i.e., Banco Bilbao and Barclays PLC go up and down completely randomly.
Pair Corralation between Banco Bilbao and Barclays PLC
Assuming the 90 days horizon Banco Bilbao Vizcaya is expected to under-perform the Barclays PLC. In addition to that, Banco Bilbao is 1.2 times more volatile than Barclays PLC ADR. It trades about -0.05 of its total potential returns per unit of risk. Barclays PLC ADR is currently generating about 0.1 per unit of volatility. If you would invest 1,173 in Barclays PLC ADR on August 31, 2024 and sell it today you would earn a total of 150.00 from holding Barclays PLC ADR or generate 12.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banco Bilbao Vizcaya vs. Barclays PLC ADR
Performance |
| Timeline |
| Banco Bilbao Vizcaya |
| Barclays PLC ADR |
Banco Bilbao and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banco Bilbao and Barclays PLC
The main advantage of trading using opposite Banco Bilbao and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banco Bilbao position performs unexpectedly, Barclays PLC 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 PLC will offset losses from the drop in Barclays PLC's long position.| Banco Bilbao vs. Bank of America | Banco Bilbao vs. Barclays PLC | Banco Bilbao vs. Bank of America | Banco Bilbao vs. ABN AMRO Bank |
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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 Stocks Directory module to find actively traded stocks across global markets.
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