Correlation Between Barclays Capital and IPath Bloomberg

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

By analyzing existing cross correlation between Barclays Capital and iPath Bloomberg Commodity, you can compare the effects of market volatilities on Barclays Capital and IPath Bloomberg 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 IPath Bloomberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays Capital and IPath Bloomberg.

Diversification Opportunities for Barclays Capital and IPath Bloomberg

-0.33

Correlation Coefficient

Barclays Capital  IPath Bloomberg

Very good diversification

The 3 months correlation between Barclays and IPath is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Barclays Capital and iPath Bloomberg Commodity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iPath Bloomberg Commodity 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 IPath Bloomberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iPath Bloomberg Commodity has no effect on the direction of Barclays Capital i.e., Barclays Capital and IPath Bloomberg go up and down completely randomly.

Pair Corralation between Barclays Capital and IPath Bloomberg

If you would invest  3,223  in iPath Bloomberg Commodity on March 9, 2024 and sell it today you would earn a total of  71.00  from holding iPath Bloomberg Commodity or generate 2.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Barclays Capital  vs.  iPath Bloomberg Commodity

Barclays Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barclays Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Barclays Capital is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

iPath Bloomberg Commodity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iPath Bloomberg Commodity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward-looking indicators, IPath Bloomberg may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Barclays Capital and IPath Bloomberg

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

The idea behind Barclays Capital and iPath Bloomberg Commodity 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.