Correlation Between UBS AG and Barclays Capital

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

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

Diversification Opportunities for UBS AG and Barclays Capital

-0.5

Correlation Coefficient

UBS AG  Barclays Capital

Very good diversification

The 3 months correlation between UBS and Barclays is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding UBS AG London and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital and UBS AG 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 AG London are associated (or correlated) with Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of UBS AG i.e., UBS AG and Barclays Capital go up and down completely randomly.

Pair Corralation between UBS AG and Barclays Capital

Given the investment horizon of 90 days UBS AG London is expected to generate 1.94 times more return on investment than Barclays Capital. However, UBS AG is 1.94 times more volatile than Barclays Capital. It trades about 0.01 of its potential returns per unit of risk. Barclays Capital is currently generating about -0.04 per unit of risk. If you would invest  2,464  in UBS AG London on September 14, 2024 and sell it today you would earn a total of  86.00  from holding UBS AG London or generate 3.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	28.95%
Values	Daily Returns

UBS AG London  vs.  Barclays Capital

UBS AG London

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UBS AG London are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, UBS AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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. In spite of very healthy fundamental indicators, Barclays Capital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with UBS AG and Barclays Capital

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

The idea behind UBS AG London and Barclays Capital 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 Commodity Directory module to find actively traded commodities issued by global exchanges.