Correlation Between Barclays Plc and B of A

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Can any of the company-specific risk be diversified away by investing in both Barclays Plc and B of A 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 B of A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays Plc ADR and Bank Of America, you can compare the effects of market volatilities on Barclays Plc and B of A 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 B of A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays Plc and B of A.

Diversification Opportunities for Barclays Plc and B of A

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Barclays and B of A is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Barclays Plc ADR and Bank Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Of America 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 ADR are associated (or correlated) with B of A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Of America has no effect on the direction of Barclays Plc i.e., Barclays Plc and B of A go up and down completely randomly.

Pair Corralation between Barclays Plc and B of A

Considering the 90-day investment horizon Barclays Plc ADR is expected to under-perform the B of A. In addition to that, Barclays Plc is 1.27 times more volatile than Bank Of America. It trades about -0.01 of its total potential returns per unit of risk. Bank Of America is currently generating about 0.01 per unit of volatility. If you would invest  3,139  in Bank Of America on June 30, 2022 and sell it today you would lose (32.00)  from holding Bank Of America or give up 1.02% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Barclays Plc ADR  vs.  Bank Of America

 Performance (%) 
       Timeline  
Barclays Plc ADR 
Barclays Performance
0 of 100
Over the last 90 days Barclays Plc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest sluggish performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Barclays Price Channel

Bank Of America 
B of A Performance
0 of 100
Over the last 90 days Bank Of America has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, B of A is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

B of A Price Channel

Barclays Plc and B of A Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Barclays Plc and B of A

The main advantage of trading using opposite Barclays Plc and B of A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays Plc position performs unexpectedly, B of A 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 B of A will offset losses from the drop in B of A's long position.
Barclays Plc vs. JP Morgan Chase
Barclays Plc vs. Bank Of America
Barclays Plc vs. Tonner-One World Holdings
The idea behind Barclays Plc ADR and Bank Of America 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.
B of A vs. JP Morgan Chase
B of A vs. Tonner-One World Holdings
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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