Correlation Between UBS Money and Dow Jones
Can any of the company-specific risk be diversified away by investing in both UBS Money and Dow Jones 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 Money and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS Money Market and Dow Jones Industrial, you can compare the effects of market volatilities on UBS Money and Dow Jones 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 Money with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Money and Dow Jones.
Diversification Opportunities for UBS Money and Dow Jones
Very poor diversification
The 3 months correlation between UBS and Dow is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding UBS Money Market and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and UBS Money 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 Money Market are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of UBS Money i.e., UBS Money and Dow Jones go up and down completely randomly.
Pair Corralation between UBS Money and Dow Jones
Assuming the 90 days trading horizon UBS Money Market is expected to generate 0.49 times more return on investment than Dow Jones. However, UBS Money Market is 2.04 times less risky than Dow Jones. It trades about 0.27 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.06 per unit of risk. If you would invest 184,013 in UBS Money Market on September 13, 2024 and sell it today you would earn a total of 7,983 from holding UBS Money Market or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.35% |
| Values | Daily Returns |
UBS Money Market vs. Dow Jones Industrial
Performance |
| Timeline |
UBS Money and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
UBS Money Market
Pair trading matchups for UBS Money
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with UBS Money and Dow Jones
The main advantage of trading using opposite UBS Money and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Money position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| UBS Money vs. Swedbank Robur Corporate | UBS Money vs. BBVA Telecomunicaciones PP | UBS Money vs. Caixabank Seleccin Tendencias | UBS Money vs. JPMIF Bond Fund |
| Dow Jones vs. ChampionX | Dow Jones vs. Highway Holdings Limited | Dow Jones vs. Westinghouse Air Brake | Dow Jones vs. Cementos Pacasmayo SAA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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