Correlation Between Barclays PLC and East West
Can any of the company-specific risk be diversified away by investing in both Barclays PLC and East West 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 PLC and East West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays PLC ADR and East West Bancorp, you can compare the effects of market volatilities on Barclays PLC and East West 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 PLC with a short position of East West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays PLC and East West.
Diversification Opportunities for Barclays PLC and East West
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Barclays and East is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Barclays PLC ADR and East West Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East West Bancorp and Barclays PLC 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 PLC ADR are associated (or correlated) with East West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East West Bancorp has no effect on the direction of Barclays PLC i.e., Barclays PLC and East West go up and down completely randomly.
Pair Corralation between Barclays PLC and East West
Considering the 90-day investment horizon Barclays PLC ADR is expected to generate 0.83 times more return on investment than East West. However, Barclays PLC ADR is 1.2 times less risky than East West. It trades about 0.07 of its potential returns per unit of risk. East West Bancorp is currently generating about 0.05 per unit of risk. If you would invest 713.00 in Barclays PLC ADR on August 23, 2024 and sell it today you would earn a total of 619.00 from holding Barclays PLC ADR or generate 86.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barclays PLC ADR vs. East West Bancorp
Performance |
| Timeline |
| Barclays PLC ADR |
| East West Bancorp |
Barclays PLC and East West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays PLC and East West
The main advantage of trading using opposite Barclays PLC and East West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays PLC position performs unexpectedly, East West 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 East West will offset losses from the drop in East West's long position.| Barclays PLC vs. Banco Bilbao Viscaya | Barclays PLC vs. Banco Santander SA | Barclays PLC vs. UBS Group AG | Barclays PLC vs. HSBC Holdings PLC |
| East West vs. Barclays PLC ADR | East West vs. UBS Group AG | East West vs. ING Group NV | East West vs. Citigroup |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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