Correlation Between Bank of Communications Co and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both Bank of Communications Co 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 Bank of Communications Co and Barclays PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Communications and Barclays PLC, you can compare the effects of market volatilities on Bank of Communications Co 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 Bank of Communications Co with a short position of Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Communications Co and Barclays PLC.
Diversification Opportunities for Bank of Communications Co and Barclays PLC
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Barclays is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Communications and Barclays PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC and Bank of Communications Co 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 Bank of Communications 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 has no effect on the direction of Bank of Communications Co i.e., Bank of Communications Co and Barclays PLC go up and down completely randomly.
Pair Corralation between Bank of Communications Co and Barclays PLC
Assuming the 90 days horizon Bank of Communications Co is expected to generate 4.49 times less return on investment than Barclays PLC. In addition to that, Bank of Communications Co is 1.1 times more volatile than Barclays PLC. It trades about 0.03 of its total potential returns per unit of risk. Barclays PLC is currently generating about 0.16 per unit of volatility. If you would invest 278.00 in Barclays PLC on September 3, 2024 and sell it today you would earn a total of 52.00 from holding Barclays PLC or generate 18.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Communications vs. Barclays PLC
Performance |
| Timeline |
| Bank of Communications Co |
| Barclays PLC |
Bank of Communications Co and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Communications Co and Barclays PLC
The main advantage of trading using opposite Bank of Communications Co and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Communications Co 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.| Bank of Communications Co vs. Bank of China | Bank of Communications Co vs. Bank of America | Bank of Communications Co vs. ABN AMRO Bank | Bank of Communications Co vs. Banco Bilbao Viscaya |
| Barclays PLC vs. ABN AMRO Bank | Barclays PLC vs. Bank of America | Barclays PLC vs. Bank of America | Barclays PLC vs. Banco Bilbao Vizcaya |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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