Correlation Between UBS ETF and Invesco EURO
Can any of the company-specific risk be diversified away by investing in both UBS ETF and Invesco EURO 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 ETF and Invesco EURO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS ETF MSCI and Invesco EURO STOXX, you can compare the effects of market volatilities on UBS ETF and Invesco EURO 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 ETF with a short position of Invesco EURO. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETF and Invesco EURO.
Diversification Opportunities for UBS ETF and Invesco EURO
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UBS and Invesco is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETF MSCI and Invesco EURO STOXX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco EURO STOXX and UBS ETF 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 ETF MSCI are associated (or correlated) with Invesco EURO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco EURO STOXX has no effect on the direction of UBS ETF i.e., UBS ETF and Invesco EURO go up and down completely randomly.
Pair Corralation between UBS ETF and Invesco EURO
Assuming the 90 days trading horizon UBS ETF is expected to generate 1.65 times less return on investment than Invesco EURO. But when comparing it to its historical volatility, UBS ETF MSCI is 1.1 times less risky than Invesco EURO. It trades about 0.05 of its potential returns per unit of risk. Invesco EURO STOXX is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,076 in Invesco EURO STOXX on September 12, 2024 and sell it today you would earn a total of 3,358 from holding Invesco EURO STOXX or generate 37.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS ETF MSCI vs. Invesco EURO STOXX
Performance |
| Timeline |
| UBS ETF MSCI |
| Invesco EURO STOXX |
UBS ETF and Invesco EURO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS ETF and Invesco EURO
The main advantage of trading using opposite UBS ETF and Invesco EURO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETF position performs unexpectedly, Invesco EURO 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 EURO will offset losses from the drop in Invesco EURO's long position.| UBS ETF vs. Baloise Holding AG | UBS ETF vs. 21Shares Polkadot ETP | UBS ETF vs. BB Biotech AG | UBS ETF vs. Amundi Index Solutions |
| Invesco EURO vs. Baloise Holding AG | Invesco EURO vs. 21Shares Polkadot ETP | Invesco EURO vs. UBS ETF MSCI | Invesco EURO vs. BB Biotech AG |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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