Correlation Between Barclays ETN and Invesco International

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

Diversification Opportunities for Barclays ETN and Invesco International

-0.81

Correlation Coefficient

Barclays ETN  Invesco International

Pay attention - limited upside

The 3 months correlation between Barclays and Invesco is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Barclays ETN Select and Invesco International Corporat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco International 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 International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco International has no effect on the direction of Barclays ETN i.e., Barclays ETN and Invesco International go up and down completely randomly.

Pair Corralation between Barclays ETN and Invesco International

Given the investment horizon of 90 days Barclays ETN Select is expected to generate 2.71 times more return on investment than Invesco International. However, Barclays ETN is 2.71 times more volatile than Invesco International Corporate. It trades about 0.17 of its potential returns per unit of risk. Invesco International Corporate is currently generating about 0.01 per unit of risk. If you would invest  2,775  in Barclays ETN Select on September 14, 2024 and sell it today you would earn a total of  118.00  from holding Barclays ETN Select or generate 4.25% return on investment over 90 days.

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

Barclays ETN Select  vs.  Invesco International Corporat

Barclays ETN Select

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barclays ETN Select are ranked lower than 14 (%) 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 January 2025.

Invesco International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco International Corporate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Invesco International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barclays ETN and Invesco International

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

The idea behind Barclays ETN Select and Invesco International Corporate 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.