Correlation Between UBS Fund and UBS ETF
Can any of the company-specific risk be diversified away by investing in both UBS Fund 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 UBS Fund and UBS ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS Fund Solutions and UBS ETF plc, you can compare the effects of market volatilities on UBS Fund 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 UBS Fund with a short position of UBS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Fund and UBS ETF.
Diversification Opportunities for UBS Fund and UBS ETF
Very poor diversification
The 3 months correlation between UBS and UBS is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding UBS Fund Solutions 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 UBS Fund 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 Fund Solutions 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 UBS Fund i.e., UBS Fund and UBS ETF go up and down completely randomly.
Pair Corralation between UBS Fund and UBS ETF
Assuming the 90 days trading horizon UBS Fund is expected to generate 10.18 times less return on investment than UBS ETF. But when comparing it to its historical volatility, UBS Fund Solutions is 1.27 times less risky than UBS ETF. It trades about 0.01 of its potential returns per unit of risk. UBS ETF plc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 135,001 in UBS ETF plc on September 12, 2024 and sell it today you would earn a total of 40,519 from holding UBS ETF plc or generate 30.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 85.92% |
| Values | Daily Returns |
UBS Fund Solutions vs. UBS ETF plc
Performance |
| Timeline |
| UBS Fund Solutions |
| UBS ETF plc |
UBS Fund and UBS ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS Fund and UBS ETF
The main advantage of trading using opposite UBS Fund and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Fund 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.| UBS Fund vs. Vanguard FTSE Developed | UBS Fund vs. Leverage Shares 2x | UBS Fund vs. Amundi Index Solutions | UBS Fund vs. Amundi Index Solutions |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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