Correlation Between Invesco DB and Barclays Capital
Can any of the company-specific risk be diversified away by investing in both Invesco DB and Barclays Capital 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 Invesco DB and Barclays Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco DB Base and Barclays Capital, you can compare the effects of market volatilities on Invesco DB and Barclays Capital 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 Invesco DB with a short position of Barclays Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco DB and Barclays Capital.
Diversification Opportunities for Invesco DB and Barclays Capital
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Invesco and Barclays is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Invesco DB Base and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital and Invesco DB 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 Invesco DB Base are associated (or correlated) with Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of Invesco DB i.e., Invesco DB and Barclays Capital go up and down completely randomly.
Pair Corralation between Invesco DB and Barclays Capital
Considering the 90-day investment horizon Invesco DB Base is expected to generate 1.42 times more return on investment than Barclays Capital. However, Invesco DB is 1.42 times more volatile than Barclays Capital. It trades about 0.02 of its potential returns per unit of risk. Barclays Capital is currently generating about -0.03 per unit of risk. If you would invest 1,903 in Invesco DB Base on September 3, 2024 and sell it today you would earn a total of 111.00 from holding Invesco DB Base or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 30.71% |
| Values | Daily Returns |
Invesco DB Base vs. Barclays Capital
Performance |
| Timeline |
| Invesco DB Base |
| Barclays Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Invesco DB and Barclays Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco DB and Barclays Capital
The main advantage of trading using opposite Invesco DB and Barclays Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco DB position performs unexpectedly, Barclays Capital 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 Barclays Capital will offset losses from the drop in Barclays Capital's long position.| Invesco DB vs. Invesco DB Precious | Invesco DB vs. Invesco DB Energy | Invesco DB vs. Invesco DB Agriculture | Invesco DB vs. Invesco DB Commodity |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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