Correlation Between Barclays ETN and IShares MSCI

Can any of the company-specific risk be diversified away by investing in both Barclays ETN and IShares MSCI 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 ETN and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barclays ETN Select and iShares MSCI India, you can compare the effects of market volatilities on Barclays ETN and IShares MSCI 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 ETN with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays ETN and IShares MSCI.

Diversification Opportunities for Barclays ETN and IShares MSCI

-0.52

Correlation Coefficient

Barclays ETN  IShares MSCI

Excellent diversification

The 3 months correlation between Barclays and IShares is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Barclays ETN Select and iShares MSCI India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI India and Barclays ETN 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 ETN Select are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI India has no effect on the direction of Barclays ETN i.e., Barclays ETN and IShares MSCI go up and down completely randomly.

Pair Corralation between Barclays ETN and IShares MSCI

Given the investment horizon of 90 days Barclays ETN Select is expected to generate 0.96 times more return on investment than IShares MSCI. However, Barclays ETN Select is 1.04 times less risky than IShares MSCI. It trades about 0.2 of its potential returns per unit of risk. iShares MSCI India is currently generating about -0.01 per unit of risk. If you would invest  2,544  in Barclays ETN Select on September 12, 2024 and sell it today you would earn a total of  340.00  from holding Barclays ETN Select or generate 13.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Barclays ETN Select  vs.  iShares MSCI India

Barclays ETN Select

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barclays ETN Select are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Barclays ETN reported solid returns over the last few months and may actually be approaching a breakup point.

iShares MSCI India

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares MSCI India has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, IShares MSCI is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Barclays ETN and IShares MSCI

The main advantage of trading using opposite Barclays ETN and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays ETN position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.

The idea behind Barclays ETN Select and iShares MSCI India 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.