Correlation Between UBS ETRACS and Invesco Aerospace
Can any of the company-specific risk be diversified away by investing in both UBS ETRACS and Invesco Aerospace 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 Invesco Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS ETRACS and Invesco Aerospace Defense, you can compare the effects of market volatilities on UBS ETRACS and Invesco Aerospace 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 Invesco Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETRACS and Invesco Aerospace.
Diversification Opportunities for UBS ETRACS and Invesco Aerospace
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UBS and Invesco is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and Invesco Aerospace Defense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Aerospace Defense 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 Invesco Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Aerospace Defense has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and Invesco Aerospace go up and down completely randomly.
Pair Corralation between UBS ETRACS and Invesco Aerospace
Given the investment horizon of 90 days UBS ETRACS is expected to generate 1.49 times less return on investment than Invesco Aerospace. In addition to that, UBS ETRACS is 8.17 times more volatile than Invesco Aerospace Defense. It trades about 0.02 of its total potential returns per unit of risk. Invesco Aerospace Defense is currently generating about 0.25 per unit of volatility. If you would invest 11,440 in Invesco Aerospace Defense on November 3, 2024 and sell it today you would earn a total of 647.00 from holding Invesco Aerospace Defense or generate 5.66% 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. Invesco Aerospace Defense
Performance |
| Timeline |
| UBS ETRACS |
| Invesco Aerospace Defense |
UBS ETRACS and Invesco Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS ETRACS and Invesco Aerospace
The main advantage of trading using opposite UBS ETRACS and Invesco Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETRACS position performs unexpectedly, Invesco Aerospace 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 Invesco Aerospace will offset losses from the drop in Invesco Aerospace'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 |
| Invesco Aerospace vs. SPDR SP Aerospace | Invesco Aerospace vs. iShares Aerospace Defense | Invesco Aerospace vs. Invesco Dynamic Building | Invesco Aerospace vs. Invesco Dynamic Semiconductors |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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