Correlation Between SP 500 and UBS ETF
Can any of the company-specific risk be diversified away by investing in both SP 500 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 SP 500 and UBS ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP 500 VIX and UBS ETF plc, you can compare the effects of market volatilities on SP 500 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 SP 500 with a short position of UBS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP 500 and UBS ETF.
Diversification Opportunities for SP 500 and UBS ETF
Excellent diversification
The 3 months correlation between VILX and UBS is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding SP 500 VIX 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 SP 500 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 SP 500 VIX 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 SP 500 i.e., SP 500 and UBS ETF go up and down completely randomly.
Pair Corralation between SP 500 and UBS ETF
Assuming the 90 days trading horizon SP 500 VIX is expected to generate 83.84 times more return on investment than UBS ETF. However, SP 500 is 83.84 times more volatile than UBS ETF plc. It trades about 0.06 of its potential returns per unit of risk. UBS ETF plc is currently generating about 0.12 per unit of risk. If you would invest 170.00 in SP 500 VIX on September 14, 2024 and sell it today you would earn a total of 157,389 from holding SP 500 VIX or generate 92581.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SP 500 VIX vs. UBS ETF plc
Performance |
| Timeline |
| SP 500 VIX |
| UBS ETF plc |
SP 500 and UBS ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP 500 and UBS ETF
The main advantage of trading using opposite SP 500 and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP 500 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.| SP 500 vs. iShares MSCI Japan | SP 500 vs. Amundi EUR High | SP 500 vs. iShares JP Morgan | SP 500 vs. Xtrackers MSCI |
| UBS ETF vs. Leverage Shares 3x | UBS ETF vs. Leverage Shares 3x | UBS ETF vs. SP 500 VIX | UBS ETF vs. WisdomTree Natural Gas |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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