Correlation Between Technology Select and Barclays Capital
Can any of the company-specific risk be diversified away by investing in both Technology Select and Barclays Capital 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 Technology Select and Barclays Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology Select Sector and Barclays Capital, you can compare the effects of market volatilities on Technology Select and Barclays Capital 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 Technology Select with a short position of Barclays Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology Select and Barclays Capital.
Diversification Opportunities for Technology Select and Barclays Capital
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Technology and Barclays is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Technology Select Sector and Barclays Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barclays Capital and Technology Select 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 Technology Select Sector are associated (or correlated) with Barclays Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barclays Capital has no effect on the direction of Technology Select i.e., Technology Select and Barclays Capital go up and down completely randomly.
Pair Corralation between Technology Select and Barclays Capital
Considering the 90-day investment horizon Technology Select Sector is expected to generate 0.67 times more return on investment than Barclays Capital. However, Technology Select Sector is 1.49 times less risky than Barclays Capital. It trades about 0.06 of its potential returns per unit of risk. Barclays Capital is currently generating about -0.02 per unit of risk. If you would invest 13,804 in Technology Select Sector on January 26, 2024 and sell it today you would earn a total of 5,999 from holding Technology Select Sector or generate 43.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 60.69% |
| Values | Daily Returns |
Technology Select Sector vs. Barclays Capital
Performance |
| Timeline |
| Technology Select Sector |
| Barclays Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Technology Select and Barclays Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology Select and Barclays Capital
The main advantage of trading using opposite Technology Select and Barclays Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Select position performs unexpectedly, Barclays Capital 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 Capital will offset losses from the drop in Barclays Capital's long position.| Technology Select vs. OShares Quality Dividend | Technology Select vs. Aquagold International | Technology Select vs. Morningstar Unconstrained Allocation | Technology Select vs. High Yield Municipal Fund |
| Barclays Capital vs. Vanguard Total Stock | Barclays Capital vs. SPDR SP 500 | Barclays Capital vs. iShares Core SP | Barclays Capital vs. Vanguard Total Bond |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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