Correlation Between UBS ETRACS and Affinity World
Can any of the company-specific risk be diversified away by investing in both UBS ETRACS and Affinity World 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 Affinity World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS ETRACS and Affinity World Leaders, you can compare the effects of market volatilities on UBS ETRACS and Affinity World 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 Affinity World. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETRACS and Affinity World.
Diversification Opportunities for UBS ETRACS and Affinity World
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UBS and Affinity is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and Affinity World Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affinity World Leaders 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 Affinity World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affinity World Leaders has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and Affinity World go up and down completely randomly.
Pair Corralation between UBS ETRACS and Affinity World
Given the investment horizon of 90 days UBS ETRACS is expected to under-perform the Affinity World. In addition to that, UBS ETRACS is 4.55 times more volatile than Affinity World Leaders. It trades about -0.01 of its total potential returns per unit of risk. Affinity World Leaders is currently generating about 0.09 per unit of volatility. If you would invest 2,138 in Affinity World Leaders on October 21, 2024 and sell it today you would earn a total of 915.00 from holding Affinity World Leaders or generate 42.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.58% |
| Values | Daily Returns |
UBS ETRACS vs. Affinity World Leaders
Performance |
| Timeline |
| UBS ETRACS |
| Affinity World Leaders |
UBS ETRACS and Affinity World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS ETRACS and Affinity World
The main advantage of trading using opposite UBS ETRACS and Affinity World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETRACS position performs unexpectedly, Affinity World 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 Affinity World will offset losses from the drop in Affinity World's long position.| UBS ETRACS vs. Ultimus Managers Trust | UBS ETRACS vs. American Beacon Select | UBS ETRACS vs. Direxion Daily Regional | UBS ETRACS vs. Direxion Daily SP |
| Affinity World vs. American Century STOXX | Affinity World vs. PIMCO RAFI Dynamic | Affinity World vs. ProShares SP 500 |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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