Correlation Between UBS ETRACS and SPDR SP
Can any of the company-specific risk be diversified away by investing in both UBS ETRACS and SPDR SP 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 SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS ETRACS and SPDR SP Aerospace, you can compare the effects of market volatilities on UBS ETRACS and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETRACS and SPDR SP.
Diversification Opportunities for UBS ETRACS and SPDR SP
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UBS and SPDR is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and SPDR SP Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Aerospace 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Aerospace has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and SPDR SP go up and down completely randomly.
Pair Corralation between UBS ETRACS and SPDR SP
Given the investment horizon of 90 days UBS ETRACS is expected to generate 1.63 times less return on investment than SPDR SP. In addition to that, UBS ETRACS is 5.82 times more volatile than SPDR SP Aerospace. It trades about 0.02 of its total potential returns per unit of risk. SPDR SP Aerospace is currently generating about 0.2 per unit of volatility. If you would invest 16,537 in SPDR SP Aerospace on November 3, 2024 and sell it today you would earn a total of 1,007 from holding SPDR SP Aerospace or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS ETRACS vs. SPDR SP Aerospace
Performance |
| Timeline |
| UBS ETRACS |
| SPDR SP Aerospace |
UBS ETRACS and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS ETRACS and SPDR SP
The main advantage of trading using opposite UBS ETRACS and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETRACS position performs unexpectedly, SPDR SP 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 SPDR SP will offset losses from the drop in SPDR SP'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 |
| SPDR SP vs. Invesco Aerospace Defense | SPDR SP vs. iShares Aerospace Defense | SPDR SP vs. SPDR SP Health | SPDR SP vs. SPDR SP Transportation |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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