Correlation Between Barclays ETN and Northern Lights
Can any of the company-specific risk be diversified away by investing in both Barclays ETN and Northern Lights 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 Northern Lights into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays ETN Shiller and Northern Lights, you can compare the effects of market volatilities on Barclays ETN and Northern Lights 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 Northern Lights. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays ETN and Northern Lights.
Diversification Opportunities for Barclays ETN and Northern Lights
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barclays and Northern is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Barclays ETN Shiller and Northern Lights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Lights 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 Shiller are associated (or correlated) with Northern Lights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Lights has no effect on the direction of Barclays ETN i.e., Barclays ETN and Northern Lights go up and down completely randomly.
Pair Corralation between Barclays ETN and Northern Lights
Given the investment horizon of 90 days Barclays ETN Shiller is expected to generate 0.92 times more return on investment than Northern Lights. However, Barclays ETN Shiller is 1.09 times less risky than Northern Lights. It trades about 0.13 of its potential returns per unit of risk. Northern Lights is currently generating about 0.09 per unit of risk. If you would invest 2,493 in Barclays ETN Shiller on August 26, 2024 and sell it today you would earn a total of 660.00 from holding Barclays ETN Shiller or generate 26.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barclays ETN Shiller vs. Northern Lights
Performance |
| Timeline |
| Barclays ETN Shiller |
| Northern Lights |
Barclays ETN and Northern Lights Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays ETN and Northern Lights
The main advantage of trading using opposite Barclays ETN and Northern Lights positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays ETN position performs unexpectedly, Northern Lights 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 Northern Lights will offset losses from the drop in Northern Lights' long position.| Barclays ETN vs. VanEck China Bond | Barclays ETN vs. Barclays ETN Select | Barclays ETN vs. SPDR SSGA Large | Barclays ETN vs. Freedom 100 Emerging |
| Northern Lights vs. Ocean Park International | Northern Lights vs. Northern Lights | Northern Lights vs. Northern Lights | Northern Lights vs. Ned Davis Research |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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