Correlation Between UBS ETRACS and ALABAMA TAX
Can any of the company-specific risk be diversified away by investing in both UBS ETRACS and ALABAMA TAX 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 ETRACS and ALABAMA TAX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS ETRACS and ALABAMA TAX FREE BOND, you can compare the effects of market volatilities on UBS ETRACS and ALABAMA TAX 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 ETRACS with a short position of ALABAMA TAX. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETRACS and ALABAMA TAX.
Diversification Opportunities for UBS ETRACS and ALABAMA TAX
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UBS and ALABAMA is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and ALABAMA TAX FREE BOND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALABAMA TAX FREE and UBS ETRACS 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 ETRACS are associated (or correlated) with ALABAMA TAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALABAMA TAX FREE has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and ALABAMA TAX go up and down completely randomly.
Pair Corralation between UBS ETRACS and ALABAMA TAX
Given the investment horizon of 90 days UBS ETRACS is expected to generate 1.76 times more return on investment than ALABAMA TAX. However, UBS ETRACS is 1.76 times more volatile than ALABAMA TAX FREE BOND. It trades about 0.19 of its potential returns per unit of risk. ALABAMA TAX FREE BOND is currently generating about -0.2 per unit of risk. If you would invest 1,650 in UBS ETRACS on September 12, 2024 and sell it today you would earn a total of 224.00 from holding UBS ETRACS or generate 13.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS ETRACS vs. ALABAMA TAX FREE BOND
Performance |
| Timeline |
| UBS ETRACS |
| ALABAMA TAX FREE |
UBS ETRACS and ALABAMA TAX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS ETRACS and ALABAMA TAX
The main advantage of trading using opposite UBS ETRACS and ALABAMA TAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETRACS position performs unexpectedly, ALABAMA TAX 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 ALABAMA TAX will offset losses from the drop in ALABAMA TAX's long position.| UBS ETRACS vs. Ultimus Managers Trust | UBS ETRACS vs. Direxion Daily SP | UBS ETRACS vs. EA Series Trust | UBS ETRACS vs. Global X MLP |
| ALABAMA TAX vs. FT Vest Equity | ALABAMA TAX vs. Zillow Group Class | ALABAMA TAX vs. Northern Lights | ALABAMA TAX vs. VanEck Vectors Moodys |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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