Correlation Between Barclays PLC and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Barclays PLC and Sumitomo Mitsui 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 Sumitomo Mitsui 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 Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Barclays PLC and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays PLC and Sumitomo Mitsui.
Diversification Opportunities for Barclays PLC and Sumitomo Mitsui
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barclays and Sumitomo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Barclays PLC ADR and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial 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 Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of Barclays PLC i.e., Barclays PLC and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Barclays PLC and Sumitomo Mitsui
Considering the 90-day investment horizon Barclays PLC ADR is expected to generate 0.41 times more return on investment than Sumitomo Mitsui. However, Barclays PLC ADR is 2.41 times less risky than Sumitomo Mitsui. It trades about 0.23 of its potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.04 per unit of risk. If you would invest 1,292 in Barclays PLC ADR on October 20, 2024 and sell it today you would earn a total of 134.00 from holding Barclays PLC ADR or generate 10.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barclays PLC ADR vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Barclays PLC ADR |
| Sumitomo Mitsui Financial |
Barclays PLC and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays PLC and Sumitomo Mitsui
The main advantage of trading using opposite Barclays PLC and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays PLC position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui'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 |
| Sumitomo Mitsui vs. Barclays PLC ADR | Sumitomo Mitsui vs. HSBC Holdings PLC | Sumitomo Mitsui vs. ING Group NV | Sumitomo Mitsui 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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