Correlation Between UBS ETRACS and First Trust
Can any of the company-specific risk be diversified away by investing in both UBS ETRACS and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS ETRACS and First Trust Nasdaq, you can compare the effects of market volatilities on UBS ETRACS and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETRACS and First Trust.
Diversification Opportunities for UBS ETRACS and First Trust
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between UBS and First is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and First Trust Nasdaq in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Nasdaq 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Nasdaq has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and First Trust go up and down completely randomly.
Pair Corralation between UBS ETRACS and First Trust
Given the investment horizon of 90 days UBS ETRACS is expected to generate 6.44 times more return on investment than First Trust. However, UBS ETRACS is 6.44 times more volatile than First Trust Nasdaq. It trades about 0.04 of its potential returns per unit of risk. First Trust Nasdaq is currently generating about 0.09 per unit of risk. If you would invest 1,962 in UBS ETRACS on November 4, 2024 and sell it today you would lose (4.00) from holding UBS ETRACS or give up 0.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS ETRACS vs. First Trust Nasdaq
Performance |
| Timeline |
| UBS ETRACS |
| First Trust Nasdaq |
UBS ETRACS and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS ETRACS and First Trust
The main advantage of trading using opposite UBS ETRACS and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETRACS position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| UBS ETRACS vs. Ultimus Managers Trust | UBS ETRACS vs. American Beacon Select | UBS ETRACS vs. First Trust Indxx | UBS ETRACS vs. Direxion Daily SP |
| First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq | First Trust vs. First Trust Nasdaq |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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