Correlation Between Swiss Leader and UBS ETF
Can any of the company-specific risk be diversified away by investing in both Swiss Leader and UBS ETF 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 Swiss Leader and UBS ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swiss Leader Price and UBS ETF plc, you can compare the effects of market volatilities on Swiss Leader and UBS ETF 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 Swiss Leader with a short position of UBS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swiss Leader and UBS ETF.
Diversification Opportunities for Swiss Leader and UBS ETF
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Swiss and UBS is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Leader Price and UBS ETF plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF plc and Swiss Leader 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 Swiss Leader Price are associated (or correlated) with UBS ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETF plc has no effect on the direction of Swiss Leader i.e., Swiss Leader and UBS ETF go up and down completely randomly.
Pair Corralation between Swiss Leader and UBS ETF
Assuming the 90 days trading horizon Swiss Leader Price is expected to under-perform the UBS ETF. But the index apears to be less risky and, when comparing its historical volatility, Swiss Leader Price is 1.17 times less risky than UBS ETF. The index trades about -0.01 of its potential returns per unit of risk. The UBS ETF plc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,318 in UBS ETF plc on August 30, 2024 and sell it today you would earn a total of 128.00 from holding UBS ETF plc or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.45% |
| Values | Daily Returns |
Swiss Leader Price vs. UBS ETF plc
Performance |
| Timeline |
Swiss Leader and UBS ETF Volatility Contrast
Predicted Return Density |
| Returns |
Swiss Leader Price
Pair trading matchups for Swiss Leader
UBS ETF plc
Pair trading matchups for UBS ETF
Pair Trading with Swiss Leader and UBS ETF
The main advantage of trading using opposite Swiss Leader and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Leader position performs unexpectedly, UBS ETF 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 ETF will offset losses from the drop in UBS ETF's long position.| Swiss Leader vs. Metall Zug AG | Swiss Leader vs. Berner Kantonalbank AG | Swiss Leader vs. Zurich Insurance Group | Swiss Leader vs. Liechtensteinische Landesbank AG |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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