Correlation Between UBS Group and Roche Holding
Can any of the company-specific risk be diversified away by investing in both UBS Group and Roche Holding 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 UBS Group and Roche Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS Group AG and Roche Holding AG, you can compare the effects of market volatilities on UBS Group and Roche Holding 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 UBS Group with a short position of Roche Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Group and Roche Holding.
Diversification Opportunities for UBS Group and Roche Holding
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UBS and Roche is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group AG and Roche Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roche Holding AG and UBS Group 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 UBS Group AG are associated (or correlated) with Roche Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roche Holding AG has no effect on the direction of UBS Group i.e., UBS Group and Roche Holding go up and down completely randomly.
Pair Corralation between UBS Group and Roche Holding
Assuming the 90 days trading horizon UBS Group AG is expected to generate 1.33 times more return on investment than Roche Holding. However, UBS Group is 1.33 times more volatile than Roche Holding AG. It trades about 0.09 of its potential returns per unit of risk. Roche Holding AG is currently generating about -0.02 per unit of risk. If you would invest 1,790 in UBS Group AG on August 27, 2024 and sell it today you would earn a total of 1,040 from holding UBS Group AG or generate 58.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS Group AG vs. Roche Holding AG
Performance |
| Timeline |
| UBS Group AG |
| Roche Holding AG |
UBS Group and Roche Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS Group and Roche Holding
The main advantage of trading using opposite UBS Group and Roche Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Group position performs unexpectedly, Roche Holding 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 Roche Holding will offset losses from the drop in Roche Holding's long position.| UBS Group vs. Zurich Insurance Group | UBS Group vs. Novartis AG | UBS Group vs. Swiss Re AG | UBS Group vs. ABB |
| Roche Holding vs. Nestl SA | Roche Holding vs. Zurich Insurance Group | Roche Holding vs. Swiss Re AG | Roche Holding vs. UBS Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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