Correlation Between Vanguard Small and Barclays ETN
Can any of the company-specific risk be diversified away by investing in both Vanguard Small 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 Vanguard Small and Barclays ETN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Index and Barclays ETN Select, you can compare the effects of market volatilities on Vanguard Small 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 Vanguard Small with a short position of Barclays ETN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Barclays ETN.
Diversification Opportunities for Vanguard Small and Barclays ETN
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Barclays is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index 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 Vanguard Small 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 Vanguard Small Cap Index 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 Vanguard Small i.e., Vanguard Small and Barclays ETN go up and down completely randomly.
Pair Corralation between Vanguard Small and Barclays ETN
Allowing for the 90-day total investment horizon Vanguard Small is expected to generate 1.59 times less return on investment than Barclays ETN. In addition to that, Vanguard Small is 1.23 times more volatile than Barclays ETN Select. It trades about 0.06 of its total potential returns per unit of risk. Barclays ETN Select is currently generating about 0.12 per unit of volatility. If you would invest 1,753 in Barclays ETN Select on August 24, 2024 and sell it today you would earn a total of 1,226 from holding Barclays ETN Select or generate 69.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Barclays ETN Select
Performance |
| Timeline |
| Vanguard Small Cap |
| Barclays ETN Select |
Vanguard Small and Barclays ETN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Barclays ETN
The main advantage of trading using opposite Vanguard Small and Barclays ETN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small 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.| Vanguard Small vs. Vanguard Mid Cap Index | Vanguard Small vs. Vanguard Small Cap Value | Vanguard Small vs. Vanguard FTSE Emerging | Vanguard Small vs. Vanguard Large Cap Index |
| Barclays ETN vs. Alerian Energy Infrastructure | Barclays ETN vs. First Trust North | Barclays ETN vs. InfraCap MLP ETF |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |