Correlation Between SP 500 and UBSFund Solutions
Can any of the company-specific risk be diversified away by investing in both SP 500 and UBSFund Solutions 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 UBSFund Solutions 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 UBSFund Solutions Factor, you can compare the effects of market volatilities on SP 500 and UBSFund Solutions 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 UBSFund Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP 500 and UBSFund Solutions.
Diversification Opportunities for SP 500 and UBSFund Solutions
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between VILX and UBSFund is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding SP 500 VIX and UBSFund Solutions Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBSFund Solutions Factor 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 UBSFund Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBSFund Solutions Factor has no effect on the direction of SP 500 i.e., SP 500 and UBSFund Solutions go up and down completely randomly.
Pair Corralation between SP 500 and UBSFund Solutions
Assuming the 90 days trading horizon SP 500 VIX is expected to generate 61.83 times more return on investment than UBSFund Solutions. However, SP 500 is 61.83 times more volatile than UBSFund Solutions Factor. It trades about 0.05 of its potential returns per unit of risk. UBSFund Solutions Factor is currently generating about 0.03 per unit of risk. If you would invest 580.00 in SP 500 VIX on September 12, 2024 and sell it today you would earn a total of 158,673 from holding SP 500 VIX or generate 27357.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.7% |
| Values | Daily Returns |
SP 500 VIX vs. UBSFund Solutions Factor
Performance |
| Timeline |
| SP 500 VIX |
| UBSFund Solutions Factor |
SP 500 and UBSFund Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP 500 and UBSFund Solutions
The main advantage of trading using opposite SP 500 and UBSFund Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP 500 position performs unexpectedly, UBSFund Solutions 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 UBSFund Solutions will offset losses from the drop in UBSFund Solutions' long position.| SP 500 vs. WisdomTree Natural Gas | SP 500 vs. WisdomTree Natural Gas | SP 500 vs. Leverage Shares 2x | SP 500 vs. WisdomTree Silver 3x |
| UBSFund Solutions vs. Leverage Shares 3x | UBSFund Solutions vs. Leverage Shares 3x | UBSFund Solutions vs. WisdomTree Natural Gas | UBSFund Solutions vs. SP 500 VIX |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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