Correlation Between UBS Group and Barclays PLC
Can any of the company-specific risk be diversified away by investing in both UBS 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 UBS 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 UBS Group AG and Barclays PLC, you can compare the effects of market volatilities on UBS 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 UBS Group with a short position of Barclays PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Group and Barclays PLC.
Diversification Opportunities for UBS Group and Barclays PLC
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UBS and Barclays is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group AG and Barclays PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC and UBS 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 UBS Group AG 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 UBS Group i.e., UBS Group and Barclays PLC go up and down completely randomly.
Pair Corralation between UBS Group and Barclays PLC
Assuming the 90 days trading horizon UBS Group is expected to generate 16.42 times less return on investment than Barclays PLC. But when comparing it to its historical volatility, UBS Group AG is 12.13 times less risky than Barclays PLC. It trades about 0.22 of its potential returns per unit of risk. Barclays PLC is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 22,010 in Barclays PLC on August 25, 2024 and sell it today you would earn a total of 4,990 from holding Barclays PLC or generate 22.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS Group AG vs. Barclays PLC
Performance |
| Timeline |
| UBS Group AG |
| Barclays PLC |
UBS Group and Barclays PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS Group and Barclays PLC
The main advantage of trading using opposite UBS Group and Barclays PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS 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.| UBS Group vs. Wells Fargo | UBS Group vs. HSBC Holdings plc | UBS Group vs. The Bank of | UBS Group vs. Barclays PLC |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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