Correlation Between Barclays ETN and IShares Expanded

Can any of the company-specific risk be diversified away by investing in both Barclays ETN and IShares Expanded 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 IShares Expanded 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 iShares Expanded Tech Software, you can compare the effects of market volatilities on Barclays ETN and IShares Expanded 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 IShares Expanded. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays ETN and IShares Expanded.

Diversification Opportunities for Barclays ETN and IShares Expanded

0.07

Correlation Coefficient

Barclays ETN  IShares Expanded

Significant diversification

The 3 months correlation between Barclays and IShares is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Barclays ETN Select and iShares Expanded Tech Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Expanded Tech 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 IShares Expanded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Expanded Tech has no effect on the direction of Barclays ETN i.e., Barclays ETN and IShares Expanded go up and down completely randomly.

Pair Corralation between Barclays ETN and IShares Expanded

Given the investment horizon of 90 days Barclays ETN Select is expected to generate 0.94 times more return on investment than IShares Expanded. However, Barclays ETN Select is 1.06 times less risky than IShares Expanded. It trades about 0.07 of its potential returns per unit of risk. iShares Expanded Tech Software is currently generating about 0.05 per unit of risk. If you would invest  2,892  in Barclays ETN Select on November 19, 2024 and sell it today you would earn a total of  161.00  from holding Barclays ETN Select or generate 5.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Barclays ETN Select  vs.  iShares Expanded Tech Software

Barclays ETN Select

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Barclays ETN Select are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Barclays ETN is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

iShares Expanded Tech

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Expanded Tech Software are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, IShares Expanded is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Barclays ETN and IShares Expanded

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

The idea behind Barclays ETN Select and iShares Expanded Tech Software 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.