Correlation Between Federated Institutional and Ubs Us
Can any of the company-specific risk be diversified away by investing in both Federated Institutional and Ubs Us 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 Federated Institutional and Ubs Us into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Institutional High and Ubs Small Cap, you can compare the effects of market volatilities on Federated Institutional and Ubs Us 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 Federated Institutional with a short position of Ubs Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Institutional and Ubs Us.
Diversification Opportunities for Federated Institutional and Ubs Us
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Federated and Ubs is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Federated Institutional High and Ubs Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubs Small Cap and Federated Institutional 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 Federated Institutional High are associated (or correlated) with Ubs Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubs Small Cap has no effect on the direction of Federated Institutional i.e., Federated Institutional and Ubs Us go up and down completely randomly.
Pair Corralation between Federated Institutional and Ubs Us
Assuming the 90 days horizon Federated Institutional is expected to generate 27.63 times less return on investment than Ubs Us. But when comparing it to its historical volatility, Federated Institutional High is 11.83 times less risky than Ubs Us. It trades about 0.13 of its potential returns per unit of risk. Ubs Small Cap is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,829 in Ubs Small Cap on September 3, 2024 and sell it today you would earn a total of 174.00 from holding Ubs Small Cap or generate 9.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Institutional High vs. Ubs Small Cap
Performance |
| Timeline |
| Federated Institutional |
| Ubs Small Cap |
Federated Institutional and Ubs Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Institutional and Ubs Us
The main advantage of trading using opposite Federated Institutional and Ubs Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Institutional position performs unexpectedly, Ubs Us 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 Us will offset losses from the drop in Ubs Us' long position.The idea behind Federated Institutional High and Ubs Small Cap 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.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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