Correlation Between UBS AG and ETRACS Quarterly
Can any of the company-specific risk be diversified away by investing in both UBS AG and ETRACS Quarterly 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 AG and ETRACS Quarterly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS AG London and ETRACS Quarterly Pay, you can compare the effects of market volatilities on UBS AG and ETRACS Quarterly 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 AG with a short position of ETRACS Quarterly. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS AG and ETRACS Quarterly.
Diversification Opportunities for UBS AG and ETRACS Quarterly
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between UBS and ETRACS is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding UBS AG London and ETRACS Quarterly Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETRACS Quarterly Pay and UBS AG 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 AG London are associated (or correlated) with ETRACS Quarterly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETRACS Quarterly Pay has no effect on the direction of UBS AG i.e., UBS AG and ETRACS Quarterly go up and down completely randomly.
Pair Corralation between UBS AG and ETRACS Quarterly
Given the investment horizon of 90 days UBS AG is expected to generate 1.37 times less return on investment than ETRACS Quarterly. But when comparing it to its historical volatility, UBS AG London is 1.48 times less risky than ETRACS Quarterly. It trades about 0.1 of its potential returns per unit of risk. ETRACS Quarterly Pay is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,479 in ETRACS Quarterly Pay on August 24, 2024 and sell it today you would earn a total of 2,709 from holding ETRACS Quarterly Pay or generate 77.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS AG London vs. ETRACS Quarterly Pay
Performance |
| Timeline |
| UBS AG London |
| ETRACS Quarterly Pay |
UBS AG and ETRACS Quarterly Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS AG and ETRACS Quarterly
The main advantage of trading using opposite UBS AG and ETRACS Quarterly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS AG position performs unexpectedly, ETRACS Quarterly 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 ETRACS Quarterly will offset losses from the drop in ETRACS Quarterly's long position.The idea behind UBS AG London and ETRACS Quarterly Pay 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.| ETRACS Quarterly vs. ETRACS Quarterly Pay | ETRACS Quarterly vs. ETRACS Monthly Pay | ETRACS Quarterly vs. ETRACS Monthly Pay | ETRACS Quarterly vs. UBS AG London |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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