Correlation Between Barclays Capital and Invesco DB
Can any of the company-specific risk be diversified away by investing in both Barclays Capital and Invesco DB 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 Capital and Invesco DB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays Capital and Invesco DB Energy, you can compare the effects of market volatilities on Barclays Capital and Invesco DB 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 Capital with a short position of Invesco DB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays Capital and Invesco DB.
Diversification Opportunities for Barclays Capital and Invesco DB
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Barclays and Invesco is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Barclays Capital and Invesco DB Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DB Energy and Barclays Capital 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 Capital are associated (or correlated) with Invesco DB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DB Energy has no effect on the direction of Barclays Capital i.e., Barclays Capital and Invesco DB go up and down completely randomly.
Pair Corralation between Barclays Capital and Invesco DB
Considering the 90-day investment horizon Barclays Capital is expected to under-perform the Invesco DB. But the etf apears to be less risky and, when comparing its historical volatility, Barclays Capital is 1.26 times less risky than Invesco DB. The etf trades about -0.06 of its potential returns per unit of risk. The Invesco DB Energy is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,158 in Invesco DB Energy on August 25, 2024 and sell it today you would lose (202.00) from holding Invesco DB Energy or give up 9.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 31.19% |
| Values | Daily Returns |
Barclays Capital vs. Invesco DB Energy
Performance |
| Timeline |
| Barclays Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Invesco DB Energy |
Barclays Capital and Invesco DB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barclays Capital and Invesco DB
The main advantage of trading using opposite Barclays Capital and Invesco DB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays Capital position performs unexpectedly, Invesco DB 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 Invesco DB will offset losses from the drop in Invesco DB's long position.The idea behind Barclays Capital and Invesco DB Energy 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.| Invesco DB vs. Aquagold International | Invesco DB vs. Morningstar Unconstrained Allocation | Invesco DB vs. High Yield Municipal Fund | Invesco DB vs. Thrivent High Yield |
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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