Correlation Between Dow Jones and Barclays ETN
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Barclays ETN 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 Dow Jones and Barclays ETN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Barclays ETN FI, you can compare the effects of market volatilities on Dow Jones and Barclays ETN 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 Dow Jones with a short position of Barclays ETN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Barclays ETN.
Diversification Opportunities for Dow Jones and Barclays ETN
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dow and Barclays is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Barclays ETN FI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays ETN FI and Dow Jones 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 Dow Jones Industrial are associated (or correlated) with Barclays ETN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays ETN FI has no effect on the direction of Dow Jones i.e., Dow Jones and Barclays ETN go up and down completely randomly.
Pair Corralation between Dow Jones and Barclays ETN
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.78 times more return on investment than Barclays ETN. However, Dow Jones Industrial is 1.29 times less risky than Barclays ETN. It trades about 0.1 of its potential returns per unit of risk. Barclays ETN FI is currently generating about 0.06 per unit of risk. If you would invest 3,181,914 in Dow Jones Industrial on November 30, 2024 and sell it today you would earn a total of 1,202,177 from holding Dow Jones Industrial or generate 37.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dow Jones Industrial vs. Barclays ETN FI
Performance |
| Timeline |
Dow Jones and Barclays ETN Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Barclays ETN FI
Pair trading matchups for Barclays ETN
Pair Trading with Dow Jones and Barclays ETN
The main advantage of trading using opposite Dow Jones and Barclays ETN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Barclays ETN 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 ETN will offset losses from the drop in Barclays ETN's long position.| Dow Jones vs. Cannae Holdings | Dow Jones vs. Fidus Investment Corp | Dow Jones vs. SEI Investments | Dow Jones vs. Cracker Barrel Old |
| Barclays ETN vs. Davis Select International | Barclays ETN vs. Principal Value ETF | Barclays ETN vs. WisdomTree Emerging Markets | Barclays ETN vs. Ballast SmallMid 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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