Correlation Between UBS AG and Invesco KBW
Can any of the company-specific risk be diversified away by investing in both UBS AG and Invesco KBW 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 UBS AG and Invesco KBW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS AG London and Invesco KBW High, you can compare the effects of market volatilities on UBS AG and Invesco KBW 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 UBS AG with a short position of Invesco KBW. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS AG and Invesco KBW.
Diversification Opportunities for UBS AG and Invesco KBW
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UBS and Invesco is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding UBS AG London and Invesco KBW High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco KBW High and UBS AG 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 UBS AG London are associated (or correlated) with Invesco KBW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco KBW High has no effect on the direction of UBS AG i.e., UBS AG and Invesco KBW go up and down completely randomly.
Pair Corralation between UBS AG and Invesco KBW
Given the investment horizon of 90 days UBS AG London is expected to generate 0.92 times more return on investment than Invesco KBW. However, UBS AG London is 1.09 times less risky than Invesco KBW. It trades about 0.2 of its potential returns per unit of risk. Invesco KBW High is currently generating about 0.08 per unit of risk. If you would invest 1,751 in UBS AG London on August 28, 2024 and sell it today you would earn a total of 184.00 from holding UBS AG London or generate 10.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS AG London vs. Invesco KBW High
Performance |
| Timeline |
| UBS AG London |
| Invesco KBW High |
UBS AG and Invesco KBW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS AG and Invesco KBW
The main advantage of trading using opposite UBS AG and Invesco KBW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS AG position performs unexpectedly, Invesco KBW 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 Invesco KBW will offset losses from the drop in Invesco KBW's long position.The idea behind UBS AG London and Invesco KBW High 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.| Invesco KBW vs. UBS AG London | Invesco KBW vs. UBS AG London | Invesco KBW vs. ETRACS Quarterly Pay | Invesco KBW vs. ETRACS 2xMonthly Pay |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |