Correlation Between Barclays Capital and Invesco

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

Diversification Opportunities for Barclays Capital and Invesco

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Barclays and Invesco is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Barclays Capital and Invesco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco 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 Invesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco has no effect on the direction of Barclays Capital i.e., Barclays Capital and Invesco go up and down completely randomly.

Pair Corralation between Barclays Capital and Invesco

Considering the 90-day investment horizon Barclays Capital is expected to generate 0.75 times more return on investment than Invesco. However, Barclays Capital is 1.33 times less risky than Invesco. It trades about 0.0 of its potential returns per unit of risk. Invesco is currently generating about -0.03 per unit of risk. If you would invest  6,795  in Barclays Capital on December 30, 2023 and sell it today you would lose (191.00) from holding Barclays Capital or give up 2.81% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy84.23%
ValuesDaily Returns

Barclays Capital  vs.  Invesco

 Performance 
       Timeline  
Barclays Capital 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Barclays Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking indicators, Barclays Capital is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
Invesco 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Invesco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Invesco is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Barclays Capital and Invesco Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Barclays Capital and Invesco

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

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