Correlation Between Barclays ETN and Invesco SP
Can any of the company-specific risk be diversified away by investing in both Barclays ETN and Invesco SP 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 SP 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 SP Spin Off, you can compare the effects of market volatilities on Barclays ETN and Invesco SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays ETN and Invesco SP.
Diversification Opportunities for Barclays ETN and Invesco SP
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barclays and Invesco is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Barclays ETN Select and Invesco SP Spin Off in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP Spin 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP Spin has no effect on the direction of Barclays ETN i.e., Barclays ETN and Invesco SP go up and down completely randomly.
Pair Corralation between Barclays ETN and Invesco SP
Given the investment horizon of 90 days Barclays ETN Select is expected to generate 0.65 times more return on investment than Invesco SP. However, Barclays ETN Select is 1.54 times less risky than Invesco SP. It trades about 0.55 of its potential returns per unit of risk. Invesco SP Spin Off is currently generating about 0.3 per unit of risk. If you would invest 2,668 in Barclays ETN Select on August 26, 2024 and sell it today you would earn a total of 330.00 from holding Barclays ETN Select or generate 12.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barclays ETN Select vs. Invesco SP Spin Off
Performance |
| Timeline |
| Barclays ETN Select |
| Invesco SP Spin |
Barclays ETN and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays ETN and Invesco SP
The main advantage of trading using opposite Barclays ETN and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays ETN position performs unexpectedly, Invesco SP 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 SP will offset losses from the drop in Invesco SP's long position.The idea behind Barclays ETN Select and Invesco SP Spin Off 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.| Invesco SP vs. Invesco BuyBack Achievers | Invesco SP vs. First Trust Equity | Invesco SP vs. Invesco Zacks Mid Cap |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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