Correlation Between ING Group and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both ING Group 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 ING Group and Barclays PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Group NV and Barclays PLC ADR, you can compare the effects of market volatilities on ING Group 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 ING Group with a short position of Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Group and Barclays PLC.
Diversification Opportunities for ING Group and Barclays PLC
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ING and Barclays is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding ING Group NV and Barclays PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC ADR and ING Group 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 ING Group NV 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 ADR has no effect on the direction of ING Group i.e., ING Group and Barclays PLC go up and down completely randomly.
Pair Corralation between ING Group and Barclays PLC
Considering the 90-day investment horizon ING Group NV is expected to under-perform the Barclays PLC. But the stock apears to be less risky and, when comparing its historical volatility, ING Group NV is 1.4 times less risky than Barclays PLC. The stock trades about -0.38 of its potential returns per unit of risk. The Barclays PLC ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,268 in Barclays PLC ADR on August 27, 2024 and sell it today you would earn a total of 29.00 from holding Barclays PLC ADR or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ING Group NV vs. Barclays PLC ADR
Performance |
| Timeline |
| ING Group NV |
| Barclays PLC ADR |
ING Group and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Group and Barclays PLC
The main advantage of trading using opposite ING Group and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Group 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.| ING Group vs. Natwest Group PLC | ING Group vs. HSBC Holdings PLC | ING Group vs. Banco Santander SA | ING Group vs. UBS Group AG |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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