Correlation Between NYSE Composite and UBS
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and UBS 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 NYSE Composite and UBS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and UBS, you can compare the effects of market volatilities on NYSE Composite and UBS 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 NYSE Composite with a short position of UBS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and UBS.
Diversification Opportunities for NYSE Composite and UBS
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NYSE and UBS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and UBS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS and NYSE Composite 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 NYSE Composite are associated (or correlated) with UBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS has no effect on the direction of NYSE Composite i.e., NYSE Composite and UBS go up and down completely randomly.
Pair Corralation between NYSE Composite and UBS
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.6 times more return on investment than UBS. However, NYSE Composite is 1.6 times more volatile than UBS. It trades about 0.11 of its potential returns per unit of risk. UBS is currently generating about 0.06 per unit of risk. If you would invest 1,549,991 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 477,213 from holding NYSE Composite or generate 30.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 8.06% |
| Values | Daily Returns |
NYSE Composite vs. UBS
Performance |
| Timeline |
NYSE Composite and UBS Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
UBS
Pair trading matchups for UBS
Pair Trading with NYSE Composite and UBS
The main advantage of trading using opposite NYSE Composite and UBS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, UBS 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 will offset losses from the drop in UBS's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
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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