Correlation Between Barclays ETN and Invesco Disciplined

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

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

Diversification Opportunities for Barclays ETN and Invesco Disciplined

0.03

Correlation Coefficient

Barclays ETN  Invesco Disciplined

Significant diversification

The 3 months correlation between Barclays and Invesco is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Barclays ETN Select and Invesco Disciplined Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Disciplined and Barclays ETN 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 ETN Select are associated (or correlated) with Invesco Disciplined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Disciplined has no effect on the direction of Barclays ETN i.e., Barclays ETN and Invesco Disciplined go up and down completely randomly.

Pair Corralation between Barclays ETN and Invesco Disciplined

Given the investment horizon of 90 days Barclays ETN Select is expected to generate 1.39 times more return on investment than Invesco Disciplined. However, Barclays ETN is 1.39 times more volatile than Invesco Disciplined Equity. It trades about 0.13 of its potential returns per unit of risk. Invesco Disciplined Equity is currently generating about -0.07 per unit of risk. If you would invest  2,791  in Barclays ETN Select on December 30, 2024 and sell it today you would earn a total of  268.00  from holding Barclays ETN Select or generate 9.6% return on investment over 90 days.

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

Barclays ETN Select  vs.  Invesco Disciplined Equity

Barclays ETN Select

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barclays ETN Select are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Barclays ETN may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Invesco Disciplined

Risk-Adjusted Performance

Very Weak

Over the last 90 days Invesco Disciplined Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Invesco Disciplined is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barclays ETN and Invesco Disciplined

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

The idea behind Barclays ETN Select and Invesco Disciplined Equity 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.