Correlation Between Cardlytics and Barclays PLC

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

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

Diversification Opportunities for Cardlytics and Barclays PLC

0.78

Correlation Coefficient

Cardlytics  Barclays PLC

Poor diversification

The 3 months correlation between Cardlytics and Barclays is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cardlytics and Barclays PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays PLC ADR and Cardlytics 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 Cardlytics are associated (or correlated) with Barclays PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays PLC ADR has no effect on the direction of Cardlytics i.e., Cardlytics and Barclays PLC go up and down completely randomly.

Pair Corralation between Cardlytics and Barclays PLC

Given the investment horizon of 90 days Cardlytics is expected to under-perform the Barclays PLC. In addition to that, Cardlytics is 1.93 times more volatile than Barclays PLC ADR. It trades about -0.16 of its total potential returns per unit of risk. Barclays PLC ADR is currently generating about 0.26 per unit of volatility. If you would invest  929.00  in Barclays PLC ADR on January 29, 2024 and sell it today you would earn a total of  113.00  from holding Barclays PLC ADR or generate 12.16% return on investment over 90 days.

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

Cardlytics  vs.  Barclays PLC ADR

Cardlytics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cardlytics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Cardlytics showed solid returns over the last few months and may actually be approaching a breakup point.

Barclays PLC ADR

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Barclays PLC ADR are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Barclays PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cardlytics and Barclays PLC

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

The idea behind Cardlytics and Barclays PLC ADR 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.