Correlation Between Barclays ETN and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Barclays ETN and IShares MSCI 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 IShares MSCI 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 iShares MSCI EAFE, you can compare the effects of market volatilities on Barclays ETN and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays ETN and IShares MSCI.
Diversification Opportunities for Barclays ETN and IShares MSCI
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Barclays and IShares is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Barclays ETN Select and iShares MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI EAFE 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI EAFE has no effect on the direction of Barclays ETN i.e., Barclays ETN and IShares MSCI go up and down completely randomly.
Pair Corralation between Barclays ETN and IShares MSCI
Given the investment horizon of 90 days Barclays ETN Select is expected to generate 1.7 times more return on investment than IShares MSCI. However, Barclays ETN is 1.7 times more volatile than iShares MSCI EAFE. It trades about 0.5 of its potential returns per unit of risk. iShares MSCI EAFE is currently generating about -0.2 per unit of risk. If you would invest 2,654 in Barclays ETN Select on August 28, 2024 and sell it today you would earn a total of 303.00 from holding Barclays ETN Select or generate 11.42% 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. iShares MSCI EAFE
Performance |
| Timeline |
| Barclays ETN Select |
| iShares MSCI EAFE |
Barclays ETN and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays ETN and IShares MSCI
The main advantage of trading using opposite Barclays ETN and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays ETN position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.The idea behind Barclays ETN Select and iShares MSCI EAFE 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.| IShares MSCI vs. iShares MSCI Emerging | IShares MSCI vs. iShares MSCI USA | IShares MSCI vs. iShares MSCI Global | IShares MSCI vs. iShares Core MSCI |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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