Correlation Between UBS ETF and Invesco AT1
Can any of the company-specific risk be diversified away by investing in both UBS ETF and Invesco AT1 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 AT1 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 AT1 Capital, you can compare the effects of market volatilities on UBS ETF and Invesco AT1 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 AT1. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETF and Invesco AT1.
Diversification Opportunities for UBS ETF and Invesco AT1
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UBS and Invesco is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETF MSCI and Invesco AT1 Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco AT1 Capital 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 AT1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco AT1 Capital has no effect on the direction of UBS ETF i.e., UBS ETF and Invesco AT1 go up and down completely randomly.
Pair Corralation between UBS ETF and Invesco AT1
Assuming the 90 days trading horizon UBS ETF MSCI is expected to generate 3.08 times more return on investment than Invesco AT1. However, UBS ETF is 3.08 times more volatile than Invesco AT1 Capital. It trades about 0.48 of its potential returns per unit of risk. Invesco AT1 Capital is currently generating about -0.12 per unit of risk. If you would invest 1,942 in UBS ETF MSCI on October 21, 2024 and sell it today you would earn a total of 82.00 from holding UBS ETF MSCI or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.75% |
| Values | Daily Returns |
UBS ETF MSCI vs. Invesco AT1 Capital
Performance |
| Timeline |
| UBS ETF MSCI |
| Invesco AT1 Capital |
UBS ETF and Invesco AT1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS ETF and Invesco AT1
The main advantage of trading using opposite UBS ETF and Invesco AT1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETF position performs unexpectedly, Invesco AT1 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 AT1 will offset losses from the drop in Invesco AT1's long position.The idea behind UBS ETF MSCI and Invesco AT1 Capital 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.| Invesco AT1 vs. Invesco AT1 Capital | Invesco AT1 vs. Invesco EURO STOXX | Invesco AT1 vs. Invesco Treasury Bond | Invesco AT1 vs. Invesco CoinShares Global |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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