Correlation Between Barclays PLC and Svenska Handelsbanken
Can any of the company-specific risk be diversified away by investing in both Barclays PLC and Svenska Handelsbanken 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 Svenska Handelsbanken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays PLC and Svenska Handelsbanken PK, you can compare the effects of market volatilities on Barclays PLC and Svenska Handelsbanken 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 Svenska Handelsbanken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays PLC and Svenska Handelsbanken.
Diversification Opportunities for Barclays PLC and Svenska Handelsbanken
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Barclays and Svenska is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Barclays PLC and Svenska Handelsbanken PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Svenska Handelsbanken 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 Svenska Handelsbanken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Svenska Handelsbanken has no effect on the direction of Barclays PLC i.e., Barclays PLC and Svenska Handelsbanken go up and down completely randomly.
Pair Corralation between Barclays PLC and Svenska Handelsbanken
Assuming the 90 days horizon Barclays PLC is expected to generate 1.92 times more return on investment than Svenska Handelsbanken. However, Barclays PLC is 1.92 times more volatile than Svenska Handelsbanken PK. It trades about 0.11 of its potential returns per unit of risk. Svenska Handelsbanken PK is currently generating about 0.06 per unit of risk. If you would invest 290.00 in Barclays PLC on September 7, 2024 and sell it today you would earn a total of 58.00 from holding Barclays PLC or generate 20.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Barclays PLC vs. Svenska Handelsbanken PK
Performance |
Timeline |
Barclays PLC |
Svenska Handelsbanken |
Barclays PLC and Svenska Handelsbanken Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barclays PLC and Svenska Handelsbanken
The main advantage of trading using opposite Barclays PLC and Svenska Handelsbanken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays PLC position performs unexpectedly, Svenska Handelsbanken 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 Svenska Handelsbanken will offset losses from the drop in Svenska Handelsbanken'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 |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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