Correlation Between Invesco KBW and UBS AG
Can any of the company-specific risk be diversified away by investing in both Invesco KBW 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 Invesco KBW and UBS AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco KBW Property and UBS AG London, you can compare the effects of market volatilities on Invesco KBW 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 Invesco KBW with a short position of UBS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco KBW and UBS AG.
Diversification Opportunities for Invesco KBW and UBS AG
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and UBS is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Invesco KBW Property 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 Invesco KBW 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 Invesco KBW Property 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 Invesco KBW i.e., Invesco KBW and UBS AG go up and down completely randomly.
Pair Corralation between Invesco KBW and UBS AG
Given the investment horizon of 90 days Invesco KBW is expected to generate 1.13 times less return on investment than UBS AG. In addition to that, Invesco KBW is 1.42 times more volatile than UBS AG London. It trades about 0.13 of its total potential returns per unit of risk. UBS AG London is currently generating about 0.21 per unit of volatility. If you would invest 2,339 in UBS AG London on August 28, 2024 and sell it today you would earn a total of 273.00 from holding UBS AG London or generate 11.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco KBW Property vs. UBS AG London
Performance |
| Timeline |
| Invesco KBW Property |
| UBS AG London |
Invesco KBW and UBS AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco KBW and UBS AG
The main advantage of trading using opposite Invesco KBW and UBS AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco KBW 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.| Invesco KBW vs. UBS AG London | Invesco KBW vs. UBS AG London | Invesco KBW vs. ETRACS Quarterly Pay | Invesco KBW vs. ETRACS 2xMonthly Pay |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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