Correlation Between Ford and Barclays ETN
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Barclays ETN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Barclays ETN Shiller, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Barclays ETN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Barclays ETN.
Diversification Opportunities for Ford and Barclays ETN
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ford and Barclays is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Barclays ETN Shiller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays ETN Shiller and Ford 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 Ford Motor 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 Shiller has no effect on the direction of Ford i.e., Ford and Barclays ETN go up and down completely randomly.
Pair Corralation between Ford and Barclays ETN
Taking into account the 90-day investment horizon Ford is expected to generate 11.52 times less return on investment than Barclays ETN. In addition to that, Ford is 2.65 times more volatile than Barclays ETN Shiller. It trades about 0.0 of its total potential returns per unit of risk. Barclays ETN Shiller is currently generating about 0.07 per unit of volatility. If you would invest 2,300 in Barclays ETN Shiller on October 25, 2024 and sell it today you would earn a total of 706.00 from holding Barclays ETN Shiller or generate 30.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Barclays ETN Shiller
Performance |
| Timeline |
| Ford Motor |
| Barclays ETN Shiller |
Ford and Barclays ETN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Barclays ETN
The main advantage of trading using opposite Ford and Barclays ETN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and Barclays ETN Shiller 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.| Barclays ETN vs. VanEck China Bond | Barclays ETN vs. Barclays ETN Select | Barclays ETN vs. SPDR SSGA Large | Barclays ETN vs. Freedom 100 Emerging |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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