Correlation Between Barclays ETN and FundX Investment
Can any of the company-specific risk be diversified away by investing in both Barclays ETN and FundX Investment 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 FundX Investment 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 FundX Investment Trust, you can compare the effects of market volatilities on Barclays ETN and FundX Investment 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 FundX Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays ETN and FundX Investment.
Diversification Opportunities for Barclays ETN and FundX Investment
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Barclays and FundX is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Barclays ETN Select and FundX Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FundX Investment Trust 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 FundX Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FundX Investment Trust has no effect on the direction of Barclays ETN i.e., Barclays ETN and FundX Investment go up and down completely randomly.
Pair Corralation between Barclays ETN and FundX Investment
Given the investment horizon of 90 days Barclays ETN Select is expected to generate 1.41 times more return on investment than FundX Investment. However, Barclays ETN is 1.41 times more volatile than FundX Investment Trust. It trades about -0.04 of its potential returns per unit of risk. FundX Investment Trust is currently generating about -0.16 per unit of risk. If you would invest 3,057 in Barclays ETN Select on December 3, 2024 and sell it today you would lose (31.00) from holding Barclays ETN Select or give up 1.01% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Barclays ETN Select vs. FundX Investment Trust
Performance |
Timeline |
Barclays ETN Select |
FundX Investment Trust |
Barclays ETN and FundX Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barclays ETN and FundX Investment
The main advantage of trading using opposite Barclays ETN and FundX Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays ETN position performs unexpectedly, FundX Investment 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 FundX Investment will offset losses from the drop in FundX Investment's long position.Barclays ETN vs. Alerian Energy Infrastructure | Barclays ETN vs. UBS AG London | Barclays ETN vs. First Trust North | Barclays ETN vs. Tortoise North American |
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Check out your portfolio center.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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