Correlation Between Barclays ETN and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Barclays ETN and IShares ESG 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 ESG 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 ESG Aware, you can compare the effects of market volatilities on Barclays ETN and IShares ESG 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 ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays ETN and IShares ESG.
Diversification Opportunities for Barclays ETN and IShares ESG
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Barclays and IShares is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Barclays ETN Select and iShares ESG Aware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG Aware 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 ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG Aware has no effect on the direction of Barclays ETN i.e., Barclays ETN and IShares ESG go up and down completely randomly.
Pair Corralation between Barclays ETN and IShares ESG
Given the investment horizon of 90 days Barclays ETN Select is expected to generate 1.01 times more return on investment than IShares ESG. However, Barclays ETN is 1.01 times more volatile than iShares ESG Aware. It trades about 0.2 of its potential returns per unit of risk. iShares ESG Aware is currently generating about 0.02 per unit of risk. If you would invest 2,191 in Barclays ETN Select on August 27, 2024 and sell it today you would earn a total of 807.00 from holding Barclays ETN Select or generate 36.83% 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. iShares ESG Aware
Performance |
| Timeline |
| Barclays ETN Select |
| iShares ESG Aware |
Barclays ETN and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays ETN and IShares ESG
The main advantage of trading using opposite Barclays ETN and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays ETN position performs unexpectedly, IShares ESG 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 ESG will offset losses from the drop in IShares ESG's long position.The idea behind Barclays ETN Select and iShares ESG Aware 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 ESG vs. Dimensional Core Equity | IShares ESG vs. Dimensional Emerging Core | IShares ESG vs. Dimensional Targeted Value | IShares ESG vs. Dimensional Small 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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