Correlation Between Barclays PLC and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Barclays PLC and Wells Fargo 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 Wells Fargo 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 Wells Fargo, you can compare the effects of market volatilities on Barclays PLC and Wells Fargo 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 Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays PLC and Wells Fargo.
Diversification Opportunities for Barclays PLC and Wells Fargo
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barclays and Wells is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Barclays PLC ADR and Wells Fargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo 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 Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo has no effect on the direction of Barclays PLC i.e., Barclays PLC and Wells Fargo go up and down completely randomly.
Pair Corralation between Barclays PLC and Wells Fargo
Considering the 90-day investment horizon Barclays PLC ADR is expected to generate 1.51 times more return on investment than Wells Fargo. However, Barclays PLC is 1.51 times more volatile than Wells Fargo. It trades about 0.3 of its potential returns per unit of risk. Wells Fargo is currently generating about 0.39 per unit of risk. If you would invest 1,319 in Barclays PLC ADR on November 9, 2024 and sell it today you would earn a total of 208.00 from holding Barclays PLC ADR or generate 15.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barclays PLC ADR vs. Wells Fargo
Performance |
| Timeline |
| Barclays PLC ADR |
| Wells Fargo |
Barclays PLC and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays PLC and Wells Fargo
The main advantage of trading using opposite Barclays PLC and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays PLC position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo'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 |
| Wells Fargo vs. Bank of America | Wells Fargo vs. JPMorgan Chase Co | Wells Fargo vs. Toronto Dominion Bank | Wells Fargo vs. Nu Holdings |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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