Correlation Between LG Battery and UBS Fund
Can any of the company-specific risk be diversified away by investing in both LG Battery and UBS Fund 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 LG Battery and UBS Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Battery Value Chain and UBS Fund Solutions, you can compare the effects of market volatilities on LG Battery and UBS Fund 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 LG Battery with a short position of UBS Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Battery and UBS Fund.
Diversification Opportunities for LG Battery and UBS Fund
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BATT and UBS is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding LG Battery Value Chain and UBS Fund Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Fund Solutions and LG Battery 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 LG Battery Value Chain are associated (or correlated) with UBS Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Fund Solutions has no effect on the direction of LG Battery i.e., LG Battery and UBS Fund go up and down completely randomly.
Pair Corralation between LG Battery and UBS Fund
Assuming the 90 days trading horizon LG Battery Value Chain is expected to generate 1.6 times more return on investment than UBS Fund. However, LG Battery is 1.6 times more volatile than UBS Fund Solutions. It trades about -0.01 of its potential returns per unit of risk. UBS Fund Solutions is currently generating about -0.03 per unit of risk. If you would invest 1,590 in LG Battery Value Chain on September 3, 2024 and sell it today you would lose (113.00) from holding LG Battery Value Chain or give up 7.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Battery Value Chain vs. UBS Fund Solutions
Performance |
| Timeline |
| LG Battery Value |
| UBS Fund Solutions |
LG Battery and UBS Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Battery and UBS Fund
The main advantage of trading using opposite LG Battery and UBS Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Battery position performs unexpectedly, UBS Fund 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 Fund will offset losses from the drop in UBS Fund's long position.| LG Battery vs. Vanguard FTSE Emerging | LG Battery vs. UBS ETF MSCI | LG Battery vs. VanEck Solana ETN | LG Battery vs. iShares Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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