Correlation Between Bank of America and UBS ETF
Can any of the company-specific risk be diversified away by investing in both Bank of America and UBS ETF 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 Bank of America and UBS ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and UBS ETF plc, you can compare the effects of market volatilities on Bank of America and UBS ETF 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 Bank of America with a short position of UBS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and UBS ETF.
Diversification Opportunities for Bank of America and UBS ETF
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and UBS is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and UBS ETF plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF plc and Bank of America 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 Bank of America are associated (or correlated) with UBS ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETF plc has no effect on the direction of Bank of America i.e., Bank of America and UBS ETF go up and down completely randomly.
Pair Corralation between Bank of America and UBS ETF
Considering the 90-day investment horizon Bank of America is expected to under-perform the UBS ETF. In addition to that, Bank of America is 1.3 times more volatile than UBS ETF plc. It trades about -0.36 of its total potential returns per unit of risk. UBS ETF plc is currently generating about -0.16 per unit of volatility. If you would invest 166,739 in UBS ETF plc on November 28, 2024 and sell it today you would lose (4,069) from holding UBS ETF plc or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. UBS ETF plc
Performance |
| Timeline |
| Bank of America |
| UBS ETF plc |
Bank of America and UBS ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and UBS ETF
The main advantage of trading using opposite Bank of America and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, UBS ETF 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 UBS ETF will offset losses from the drop in UBS ETF's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. Royal Bank of |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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