Correlation Between Barclays PLC and FibraHotel
Can any of the company-specific risk be diversified away by investing in both Barclays PLC and FibraHotel 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 FibraHotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays PLC and FibraHotel, you can compare the effects of market volatilities on Barclays PLC and FibraHotel 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 FibraHotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays PLC and FibraHotel.
Diversification Opportunities for Barclays PLC and FibraHotel
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barclays and FibraHotel is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Barclays PLC and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel 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 FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of Barclays PLC i.e., Barclays PLC and FibraHotel go up and down completely randomly.
Pair Corralation between Barclays PLC and FibraHotel
Assuming the 90 days trading horizon Barclays PLC is expected to generate 1.1 times more return on investment than FibraHotel. However, Barclays PLC is 1.1 times more volatile than FibraHotel. It trades about 0.1 of its potential returns per unit of risk. FibraHotel is currently generating about -0.02 per unit of risk. If you would invest 12,563 in Barclays PLC on August 31, 2024 and sell it today you would earn a total of 14,437 from holding Barclays PLC or generate 114.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barclays PLC vs. FibraHotel
Performance |
| Timeline |
| Barclays PLC |
| FibraHotel |
Barclays PLC and FibraHotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays PLC and FibraHotel
The main advantage of trading using opposite Barclays PLC and FibraHotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays PLC position performs unexpectedly, FibraHotel 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 FibraHotel will offset losses from the drop in FibraHotel's long position.| Barclays PLC vs. McEwen Mining | Barclays PLC vs. Cognizant Technology Solutions | Barclays PLC vs. Micron Technology | Barclays PLC vs. Grupo Carso SAB |
| FibraHotel vs. Sony Group | FibraHotel vs. Barclays PLC | FibraHotel vs. HSBC Holdings plc | FibraHotel vs. Taiwan Semiconductor Manufacturing |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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