Correlation Between Barclays PLC and Chemours

Can any of the company-specific risk be diversified away by investing in both Barclays PLC and Chemours 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 Chemours into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barclays PLC and The Chemours, you can compare the effects of market volatilities on Barclays PLC and Chemours 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 Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays PLC and Chemours.

Diversification Opportunities for Barclays PLC and Chemours

0.71

Correlation Coefficient

Barclays PLC  Chemours

Poor diversification

The 3 months correlation between Barclays and Chemours is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Barclays PLC and The Chemours in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Barclays PLC i.e., Barclays PLC and Chemours go up and down completely randomly.

Pair Corralation between Barclays PLC and Chemours

If you would invest  38,507  in The Chemours on September 26, 2024 and sell it today you would earn a total of  2,383  from holding The Chemours or generate 6.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Barclays PLC  vs.  The Chemours

Barclays PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barclays PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Barclays PLC showed solid returns over the last few months and may actually be approaching a breakup point.

Chemours

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Chemours are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Chemours showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barclays PLC and Chemours

The main advantage of trading using opposite Barclays PLC and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays PLC position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.

The idea behind Barclays PLC and The Chemours pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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.