Correlation Between IShares Semiconductor and Barclays Capital

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

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

Diversification Opportunities for IShares Semiconductor and Barclays Capital

0.0

Correlation Coefficient

IShares Semiconductor  Barclays Capital

Pay attention - limited upside

The 3 months correlation between IShares and Barclays is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Semiconductor ETF and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital and IShares Semiconductor 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 iShares Semiconductor ETF are associated (or correlated) with Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of IShares Semiconductor i.e., IShares Semiconductor and Barclays Capital go up and down completely randomly.

Pair Corralation between IShares Semiconductor and Barclays Capital

Given the investment horizon of 90 days IShares Semiconductor is expected to generate 1.71 times less return on investment than Barclays Capital. In addition to that, IShares Semiconductor is 1.6 times more volatile than Barclays Capital. It trades about 0.07 of its total potential returns per unit of risk. Barclays Capital is currently generating about 0.18 per unit of volatility. If you would invest  5,764  in Barclays Capital on October 7, 2024 and sell it today you would earn a total of  1,435  from holding Barclays Capital or generate 24.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	20.36%
Values	Daily Returns

iShares Semiconductor ETF  vs.  Barclays Capital

iShares Semiconductor ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Semiconductor ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, IShares Semiconductor is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Barclays Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barclays Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking indicators, Barclays Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Semiconductor and Barclays Capital

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

The idea behind iShares Semiconductor ETF and Barclays Capital 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.