Correlation Between NYSE Composite and UBS ETRACS
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and UBS ETRACS 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 ETRACS 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 ETRACS , you can compare the effects of market volatilities on NYSE Composite and UBS ETRACS 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 ETRACS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and UBS ETRACS.
Diversification Opportunities for NYSE Composite and UBS ETRACS
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and UBS is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and UBS ETRACS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETRACS 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 ETRACS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETRACS has no effect on the direction of NYSE Composite i.e., NYSE Composite and UBS ETRACS go up and down completely randomly.
Pair Corralation between NYSE Composite and UBS ETRACS
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.16 times more return on investment than UBS ETRACS. However, NYSE Composite is 6.3 times less risky than UBS ETRACS. It trades about 0.14 of its potential returns per unit of risk. UBS ETRACS is currently generating about 0.01 per unit of risk. If you would invest 1,914,954 in NYSE Composite on August 29, 2024 and sell it today you would earn a total of 106,991 from holding NYSE Composite or generate 5.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. UBS ETRACS
Performance |
| Timeline |
NYSE Composite and UBS ETRACS Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
UBS ETRACS
Pair trading matchups for UBS ETRACS
Pair Trading with NYSE Composite and UBS ETRACS
The main advantage of trading using opposite NYSE Composite and UBS ETRACS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, UBS ETRACS 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 ETRACS will offset losses from the drop in UBS ETRACS's long position.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| UBS ETRACS vs. First Trust Exchange Traded | UBS ETRACS vs. Ultimus Managers Trust | UBS ETRACS vs. Horizon Kinetics Medical | UBS ETRACS vs. Harbor Health Care |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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