Correlation Between UBEX and BLK
Can any of the company-specific risk be diversified away by investing in both UBEX and BLK 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 UBEX and BLK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBEX and BLK, you can compare the effects of market volatilities on UBEX and BLK 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 UBEX with a short position of BLK. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBEX and BLK.
Diversification Opportunities for UBEX and BLK
Almost no diversification
The 3 months correlation between UBEX and BLK is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding UBEX and BLK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLK and UBEX 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 UBEX are associated (or correlated) with BLK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLK has no effect on the direction of UBEX i.e., UBEX and BLK go up and down completely randomly.
Pair Corralation between UBEX and BLK
Assuming the 90 days trading horizon UBEX is expected to generate 6.24 times more return on investment than BLK. However, UBEX is 6.24 times more volatile than BLK. It trades about 0.15 of its potential returns per unit of risk. BLK is currently generating about 0.08 per unit of risk. If you would invest 0.00 in UBEX on August 27, 2024 and sell it today you would lose 0.00 from holding UBEX or give up 8.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBEX vs. BLK
Performance |
| Timeline |
| UBEX |
| BLK |
UBEX and BLK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBEX and BLK
The main advantage of trading using opposite UBEX and BLK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBEX position performs unexpectedly, BLK 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 BLK will offset losses from the drop in BLK's long position.The idea behind UBEX and BLK 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.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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