Correlation Between ETRACS 2xMonthly and UBS AG
Can any of the company-specific risk be diversified away by investing in both ETRACS 2xMonthly 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 ETRACS 2xMonthly and UBS AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS 2xMonthly Pay and UBS AG London, you can compare the effects of market volatilities on ETRACS 2xMonthly 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 ETRACS 2xMonthly with a short position of UBS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2xMonthly and UBS AG.
Diversification Opportunities for ETRACS 2xMonthly and UBS AG
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between ETRACS and UBS is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2xMonthly Pay 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 ETRACS 2xMonthly 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 ETRACS 2xMonthly Pay 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 ETRACS 2xMonthly i.e., ETRACS 2xMonthly and UBS AG go up and down completely randomly.
Pair Corralation between ETRACS 2xMonthly and UBS AG
Given the investment horizon of 90 days ETRACS 2xMonthly Pay is expected to under-perform the UBS AG. In addition to that, ETRACS 2xMonthly is 1.71 times more volatile than UBS AG London. It trades about -0.08 of its total potential returns per unit of risk. UBS AG London is currently generating about 0.2 per unit of volatility. If you would invest 2,429 in UBS AG London on August 24, 2024 and sell it today you would earn a total of 180.00 from holding UBS AG London or generate 7.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS 2xMonthly Pay vs. UBS AG London
Performance |
| Timeline |
| ETRACS 2xMonthly Pay |
| UBS AG London |
ETRACS 2xMonthly and UBS AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS 2xMonthly and UBS AG
The main advantage of trading using opposite ETRACS 2xMonthly and UBS AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2xMonthly 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.| ETRACS 2xMonthly vs. Invesco DB Dollar | ETRACS 2xMonthly vs. iPath Series B | ETRACS 2xMonthly vs. ProShares VIX Short Term | ETRACS 2xMonthly vs. ProShares UltraShort Euro |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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