Correlation Between Global X and Barclays ETN
Can any of the company-specific risk be diversified away by investing in both Global X 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 Global X and Barclays ETN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X MLP and Barclays ETN Select, you can compare the effects of market volatilities on Global X 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 Global X with a short position of Barclays ETN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and Barclays ETN.
Diversification Opportunities for Global X and Barclays ETN
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Global and Barclays is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Global X MLP and Barclays ETN Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays ETN Select and Global X 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 Global X MLP 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 Select has no effect on the direction of Global X i.e., Global X and Barclays ETN go up and down completely randomly.
Pair Corralation between Global X and Barclays ETN
Given the investment horizon of 90 days Global X is expected to generate 1.56 times less return on investment than Barclays ETN. But when comparing it to its historical volatility, Global X MLP is 1.12 times less risky than Barclays ETN. It trades about 0.09 of its potential returns per unit of risk. Barclays ETN Select is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,714 in Barclays ETN Select on August 27, 2024 and sell it today you would earn a total of 1,284 from holding Barclays ETN Select or generate 74.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X MLP vs. Barclays ETN Select
Performance |
| Timeline |
| Global X MLP |
| Barclays ETN Select |
Global X and Barclays ETN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and Barclays ETN
The main advantage of trading using opposite Global X and Barclays ETN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X 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 Global X MLP and Barclays ETN Select 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.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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