Correlation Between Barclays PLC and Agricultural Bank
Can any of the company-specific risk be diversified away by investing in both Barclays PLC and Agricultural Bank 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 Agricultural Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays PLC and Agricultural Bank, you can compare the effects of market volatilities on Barclays PLC and Agricultural Bank 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 Agricultural Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays PLC and Agricultural Bank.
Diversification Opportunities for Barclays PLC and Agricultural Bank
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barclays and Agricultural is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Barclays PLC and Agricultural Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agricultural Bank 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 Agricultural Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agricultural Bank has no effect on the direction of Barclays PLC i.e., Barclays PLC and Agricultural Bank go up and down completely randomly.
Pair Corralation between Barclays PLC and Agricultural Bank
Assuming the 90 days horizon Barclays PLC is expected to generate 1.24 times less return on investment than Agricultural Bank. But when comparing it to its historical volatility, Barclays PLC is 1.13 times less risky than Agricultural Bank. It trades about 0.09 of its potential returns per unit of risk. Agricultural Bank is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Agricultural Bank on September 6, 2024 and sell it today you would earn a total of 8.00 from holding Agricultural Bank or generate 19.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Barclays PLC vs. Agricultural Bank
Performance |
Timeline |
Barclays PLC |
Agricultural Bank |
Barclays PLC and Agricultural Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barclays PLC and Agricultural Bank
The main advantage of trading using opposite Barclays PLC and Agricultural Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays PLC position performs unexpectedly, Agricultural Bank 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 Agricultural Bank will offset losses from the drop in Agricultural Bank's long position.Barclays PLC vs. ABN AMRO Bank | Barclays PLC vs. Bank of America | Barclays PLC vs. Bank of America | Barclays PLC vs. Banco Bilbao Vizcaya |
Agricultural Bank vs. China Construction Bank | Agricultural Bank vs. National Australia Bank | Agricultural Bank vs. Svenska Handelsbanken AB | Agricultural Bank vs. Bank of America |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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