Correlation Between UBS AG and Global X
Can any of the company-specific risk be diversified away by investing in both UBS AG and Global X 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 Global X 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 Global X MLP, you can compare the effects of market volatilities on UBS AG and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS AG and Global X.
Diversification Opportunities for UBS AG and Global X
Very poor diversification
The 3 months correlation between UBS and Global is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding UBS AG London and Global X MLP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X MLP 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X MLP has no effect on the direction of UBS AG i.e., UBS AG and Global X go up and down completely randomly.
Pair Corralation between UBS AG and Global X
Given the investment horizon of 90 days UBS AG is expected to generate 1.37 times less return on investment than Global X. But when comparing it to its historical volatility, UBS AG London is 1.4 times less risky than Global X. It trades about 0.48 of its potential returns per unit of risk. Global X MLP is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 5,603 in Global X MLP on August 27, 2024 and sell it today you would earn a total of 682.00 from holding Global X MLP or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS AG London vs. Global X MLP
Performance |
| Timeline |
| UBS AG London |
| Global X MLP |
UBS AG and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS AG and Global X
The main advantage of trading using opposite UBS AG and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS AG position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.The idea behind UBS AG London and Global X MLP 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.| Global X vs. Global X MLP | Global X vs. Alerian Energy Infrastructure | Global X vs. First Trust North | Global X vs. Tortoise North American |
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 Anywhere Track or share privately all of your investments from the convenience of any device | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |