Correlation Between MicroSectors FANG and UBS AG
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and UBS AG 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 MicroSectors FANG and UBS AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG Index and UBS AG London, you can compare the effects of market volatilities on MicroSectors FANG and UBS AG 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 MicroSectors FANG with a short position of UBS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and UBS AG.
Diversification Opportunities for MicroSectors FANG and UBS AG
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between MicroSectors and UBS is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and UBS AG London in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS AG London and MicroSectors FANG 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 MicroSectors FANG Index are associated (or correlated) with UBS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS AG London has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and UBS AG go up and down completely randomly.
Pair Corralation between MicroSectors FANG and UBS AG
Given the investment horizon of 90 days MicroSectors FANG Index is expected to generate 4.69 times more return on investment than UBS AG. However, MicroSectors FANG is 4.69 times more volatile than UBS AG London. It trades about 0.14 of its potential returns per unit of risk. UBS AG London is currently generating about 0.05 per unit of risk. If you would invest 1,144 in MicroSectors FANG Index on December 24, 2024 and sell it today you would earn a total of 376.00 from holding MicroSectors FANG Index or generate 32.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MicroSectors FANG Index vs. UBS AG London
Performance |
| Timeline |
| MicroSectors FANG Index |
| UBS AG London |
MicroSectors FANG and UBS AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and UBS AG
The main advantage of trading using opposite MicroSectors FANG and UBS AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, UBS AG 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 AG will offset losses from the drop in UBS AG's long position.| MicroSectors FANG vs. MicroSectors FANG Index | MicroSectors FANG vs. Direxion Daily Semiconductor | MicroSectors FANG vs. Direxion Daily Technology | MicroSectors FANG vs. Bank of Montreal |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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