Correlation Between Barclays ETN and IShares Dow
Can any of the company-specific risk be diversified away by investing in both Barclays ETN and IShares Dow 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 Dow 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 Dow Jones, you can compare the effects of market volatilities on Barclays ETN and IShares Dow 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 Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays ETN and IShares Dow.
Diversification Opportunities for Barclays ETN and IShares Dow
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barclays and IShares is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Barclays ETN Select and iShares Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Dow Jones 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 Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Dow Jones has no effect on the direction of Barclays ETN i.e., Barclays ETN and IShares Dow go up and down completely randomly.
Pair Corralation between Barclays ETN and IShares Dow
Given the investment horizon of 90 days Barclays ETN Select is expected to generate 1.84 times more return on investment than IShares Dow. However, Barclays ETN is 1.84 times more volatile than iShares Dow Jones. It trades about 0.22 of its potential returns per unit of risk. iShares Dow Jones is currently generating about 0.21 per unit of risk. If you would invest 2,879 in Barclays ETN Select on November 3, 2024 and sell it today you would earn a total of 214.00 from holding Barclays ETN Select or generate 7.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barclays ETN Select vs. iShares Dow Jones
Performance |
| Timeline |
| Barclays ETN Select |
| iShares Dow Jones |
Barclays ETN and IShares Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays ETN and IShares Dow
The main advantage of trading using opposite Barclays ETN and IShares Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays ETN position performs unexpectedly, IShares Dow 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 Dow will offset losses from the drop in IShares Dow's long position.| Barclays ETN vs. Alerian Energy Infrastructure | Barclays ETN vs. UBS AG London | Barclays ETN vs. First Trust North | Barclays ETN vs. Tortoise North American |
| IShares Dow vs. iShares Russell 3000 | IShares Dow vs. iShares Industrials ETF | IShares Dow vs. iShares Consumer Discretionary | IShares Dow vs. iShares Consumer Staples |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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