Correlation Between Barclays Capital and WisdomTree Europe

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

By analyzing existing cross correlation between Barclays Capital and WisdomTree Europe Hedged, you can compare the effects of market volatilities on Barclays Capital and WisdomTree Europe 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 Capital with a short position of WisdomTree Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays Capital and WisdomTree Europe.

Diversification Opportunities for Barclays Capital and WisdomTree Europe

-0.31

Correlation Coefficient

Barclays Capital  WisdomTree Europe

Very good diversification

The 3 months correlation between Barclays and WisdomTree is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Barclays Capital and WisdomTree Europe Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Europe Hedged and Barclays Capital 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 Capital are associated (or correlated) with WisdomTree Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Europe Hedged has no effect on the direction of Barclays Capital i.e., Barclays Capital and WisdomTree Europe go up and down completely randomly.

Pair Corralation between Barclays Capital and WisdomTree Europe

If you would invest  7,362  in Barclays Capital on August 30, 2024 and sell it today you would earn a total of  0.00  from holding Barclays Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Barclays Capital  vs.  WisdomTree Europe Hedged

Barclays Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barclays Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Barclays Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

WisdomTree Europe Hedged

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree Europe Hedged has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady fundamental indicators, WisdomTree Europe is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Barclays Capital and WisdomTree Europe

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

The idea behind Barclays Capital and WisdomTree Europe Hedged 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.