Correlation Between UBS ETRACS and Dow Jones
Can any of the company-specific risk be diversified away by investing in both UBS ETRACS 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 ETRACS 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 ETRACS and Dow Jones Industrial, you can compare the effects of market volatilities on UBS ETRACS 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 ETRACS with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETRACS and Dow Jones.
Diversification Opportunities for UBS ETRACS and Dow Jones
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UBS and Dow is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS 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 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 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 ETRACS i.e., UBS ETRACS and Dow Jones go up and down completely randomly.
Pair Corralation between UBS ETRACS and Dow Jones
Given the investment horizon of 90 days UBS ETRACS is expected to generate 3.12 times less return on investment than Dow Jones. In addition to that, UBS ETRACS is 5.08 times more volatile than Dow Jones Industrial. It trades about 0.01 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.17 per unit of volatility. If you would invest 4,133,505 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 352,526 from holding Dow Jones Industrial or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS ETRACS vs. Dow Jones Industrial
Performance |
| Timeline |
UBS ETRACS and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
UBS ETRACS
Pair trading matchups for UBS ETRACS
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with UBS ETRACS and Dow Jones
The main advantage of trading using opposite UBS ETRACS and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETRACS 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 ETRACS vs. First Trust Exchange Traded | UBS ETRACS vs. Ultimus Managers Trust | UBS ETRACS vs. Horizon Kinetics Medical | UBS ETRACS vs. Harbor Health Care |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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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