Correlation Between First Trust and UBS AG
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and UBS AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Exchange Traded and UBS AG London, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of UBS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and UBS AG.
Diversification Opportunities for First Trust and UBS AG
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and UBS is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Exchange Traded 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 First Trust 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 First Trust Exchange Traded 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 First Trust i.e., First Trust and UBS AG go up and down completely randomly.
Pair Corralation between First Trust and UBS AG
Given the investment horizon of 90 days First Trust is expected to generate 5.35 times less return on investment than UBS AG. In addition to that, First Trust is 1.08 times more volatile than UBS AG London. It trades about 0.02 of its total potential returns per unit of risk. UBS AG London is currently generating about 0.13 per unit of volatility. If you would invest 1,797 in UBS AG London on August 29, 2024 and sell it today you would earn a total of 815.00 from holding UBS AG London or generate 45.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Exchange Traded vs. UBS AG London
Performance |
| Timeline |
| First Trust Exchange |
| UBS AG London |
First Trust and UBS AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and UBS AG
The main advantage of trading using opposite First Trust and UBS AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust Exchange Traded | First Trust vs. First Trust Expanded | First Trust vs. BlackRock Future Health | First Trust vs. SPDR SP Health |
| UBS AG vs. Global X MLP | UBS AG vs. Tortoise North American | UBS AG vs. InfraCap MLP ETF | UBS AG vs. Barclays ETN Select |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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