Correlation Between Barclays PLC and AbbVie
Can any of the company-specific risk be diversified away by investing in both Barclays PLC and AbbVie 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 AbbVie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays PLC and AbbVie Inc, you can compare the effects of market volatilities on Barclays PLC and AbbVie 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 AbbVie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays PLC and AbbVie.
Diversification Opportunities for Barclays PLC and AbbVie
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barclays and AbbVie is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Barclays PLC and AbbVie Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AbbVie Inc 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 are associated (or correlated) with AbbVie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AbbVie Inc has no effect on the direction of Barclays PLC i.e., Barclays PLC and AbbVie go up and down completely randomly.
Pair Corralation between Barclays PLC and AbbVie
Assuming the 90 days trading horizon Barclays PLC is expected to generate 0.41 times more return on investment than AbbVie. However, Barclays PLC is 2.44 times less risky than AbbVie. It trades about 0.13 of its potential returns per unit of risk. AbbVie Inc is currently generating about -0.09 per unit of risk. If you would invest 25,265 in Barclays PLC on October 30, 2024 and sell it today you would earn a total of 1,735 from holding Barclays PLC or generate 6.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.36% |
| Values | Daily Returns |
Barclays PLC vs. AbbVie Inc
Performance |
| Timeline |
| Barclays PLC |
| AbbVie Inc |
Barclays PLC and AbbVie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays PLC and AbbVie
The main advantage of trading using opposite Barclays PLC and AbbVie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays PLC position performs unexpectedly, AbbVie 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 AbbVie will offset losses from the drop in AbbVie's long position.| Barclays PLC vs. Cognizant Technology Solutions | Barclays PLC vs. Verizon Communications | Barclays PLC vs. Grupo Sports World | Barclays PLC vs. Genworth Financial |
| AbbVie vs. Capital One Financial | AbbVie vs. Genworth Financial | AbbVie vs. Hoteles City Express | AbbVie vs. Cognizant Technology Solutions |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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