Correlation Between UBS ETF and Vanguard
Can any of the company-specific risk be diversified away by investing in both UBS ETF and Vanguard 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 Vanguard 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 Vanguard SP 500, you can compare the effects of market volatilities on UBS ETF and Vanguard 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 Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETF and Vanguard.
Diversification Opportunities for UBS ETF and Vanguard
Excellent diversification
The 3 months correlation between UBS and Vanguard is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETF MSCI and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 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 Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of UBS ETF i.e., UBS ETF and Vanguard go up and down completely randomly.
Pair Corralation between UBS ETF and Vanguard
Assuming the 90 days trading horizon UBS ETF is expected to generate 10.33 times less return on investment than Vanguard. But when comparing it to its historical volatility, UBS ETF MSCI is 1.32 times less risky than Vanguard. It trades about 0.01 of its potential returns per unit of risk. Vanguard SP 500 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 9,198 in Vanguard SP 500 on September 13, 2024 and sell it today you would earn a total of 1,008 from holding Vanguard SP 500 or generate 10.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS ETF MSCI vs. Vanguard SP 500
Performance |
| Timeline |
| UBS ETF MSCI |
| Vanguard SP 500 |
UBS ETF and Vanguard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS ETF and Vanguard
The main advantage of trading using opposite UBS ETF and Vanguard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETF position performs unexpectedly, Vanguard 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 Vanguard will offset losses from the drop in Vanguard's long position.The idea behind UBS ETF MSCI and Vanguard SP 500 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.| Vanguard vs. Baloise Holding AG | Vanguard vs. 21Shares Polkadot ETP | Vanguard vs. UBS ETF MSCI | Vanguard 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |