Correlation Between HDFC Bank and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both HDFC Bank and Barclays PLC 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 HDFC Bank and Barclays PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HDFC Bank Limited and Barclays PLC, you can compare the effects of market volatilities on HDFC Bank and Barclays PLC 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 HDFC Bank with a short position of Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of HDFC Bank and Barclays PLC.
Diversification Opportunities for HDFC Bank and Barclays PLC
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HDFC and Barclays is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding HDFC Bank Limited and Barclays PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC and HDFC Bank 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 HDFC Bank Limited are associated (or correlated) with Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC has no effect on the direction of HDFC Bank i.e., HDFC Bank and Barclays PLC go up and down completely randomly.
Pair Corralation between HDFC Bank and Barclays PLC
Assuming the 90 days trading horizon HDFC Bank is expected to generate 2.29 times less return on investment than Barclays PLC. But when comparing it to its historical volatility, HDFC Bank Limited is 1.19 times less risky than Barclays PLC. It trades about 0.03 of its potential returns per unit of risk. Barclays PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,765 in Barclays PLC on September 19, 2024 and sell it today you would earn a total of 3,539 from holding Barclays PLC or generate 74.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.88% |
| Values | Daily Returns |
HDFC Bank Limited vs. Barclays PLC
Performance |
| Timeline |
| HDFC Bank Limited |
| Barclays PLC |
HDFC Bank and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HDFC Bank and Barclays PLC
The main advantage of trading using opposite HDFC Bank and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HDFC Bank position performs unexpectedly, Barclays PLC 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 Barclays PLC will offset losses from the drop in Barclays PLC's long position.| HDFC Bank vs. Costco Wholesale | HDFC Bank vs. Nordon Indstrias Metalrgicas | HDFC Bank vs. STMicroelectronics NV | HDFC Bank vs. Ross Stores |
| Barclays PLC vs. HSBC Holdings plc | Barclays PLC vs. Wells Fargo | Barclays PLC vs. BTG Pactual Logstica | Barclays PLC vs. Plano Plano Desenvolvimento |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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