Correlation Between Barclays ETN and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both Barclays ETN and Dimensional ETF 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 Dimensional ETF 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 Dimensional ETF Trust, you can compare the effects of market volatilities on Barclays ETN and Dimensional ETF 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 Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays ETN and Dimensional ETF.
Diversification Opportunities for Barclays ETN and Dimensional ETF
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Barclays and Dimensional is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Barclays ETN Select and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF 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 Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of Barclays ETN i.e., Barclays ETN and Dimensional ETF go up and down completely randomly.
Pair Corralation between Barclays ETN and Dimensional ETF
Given the investment horizon of 90 days Barclays ETN Select is expected to generate 3.51 times more return on investment than Dimensional ETF. However, Barclays ETN is 3.51 times more volatile than Dimensional ETF Trust. It trades about 0.61 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.08 per unit of risk. If you would invest 2,658 in Barclays ETN Select on September 1, 2024 and sell it today you would earn a total of 370.00 from holding Barclays ETN Select or generate 13.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barclays ETN Select vs. Dimensional ETF Trust
Performance |
| Timeline |
| Barclays ETN Select |
| Dimensional ETF Trust |
Barclays ETN and Dimensional ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays ETN and Dimensional ETF
The main advantage of trading using opposite Barclays ETN and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays ETN position performs unexpectedly, Dimensional ETF 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 Dimensional ETF will offset losses from the drop in Dimensional ETF's long position.| Barclays ETN vs. First Trust North | Barclays ETN vs. Global X MLP | Barclays ETN vs. Tortoise North American | Barclays ETN vs. UBS AG London |
| Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional Core Equity |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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