Correlation Between Xtrackers Nikkei and UBS ETF
Can any of the company-specific risk be diversified away by investing in both Xtrackers Nikkei and UBS ETF 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 Xtrackers Nikkei and UBS ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers Nikkei 225 and UBS ETF Public, you can compare the effects of market volatilities on Xtrackers Nikkei and UBS ETF 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 Xtrackers Nikkei with a short position of UBS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers Nikkei and UBS ETF.
Diversification Opportunities for Xtrackers Nikkei and UBS ETF
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xtrackers and UBS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers Nikkei 225 and UBS ETF Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF Public and Xtrackers Nikkei 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 Xtrackers Nikkei 225 are associated (or correlated) with UBS ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETF Public has no effect on the direction of Xtrackers Nikkei i.e., Xtrackers Nikkei and UBS ETF go up and down completely randomly.
Pair Corralation between Xtrackers Nikkei and UBS ETF
Assuming the 90 days trading horizon Xtrackers Nikkei is expected to generate 24.14 times less return on investment than UBS ETF. But when comparing it to its historical volatility, Xtrackers Nikkei 225 is 1.07 times less risky than UBS ETF. It trades about 0.01 of its potential returns per unit of risk. UBS ETF Public is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 13,873 in UBS ETF Public on November 2, 2024 and sell it today you would earn a total of 352.00 from holding UBS ETF Public or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers Nikkei 225 vs. UBS ETF Public
Performance |
| Timeline |
| Xtrackers Nikkei 225 |
| UBS ETF Public |
Xtrackers Nikkei and UBS ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers Nikkei and UBS ETF
The main advantage of trading using opposite Xtrackers Nikkei and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers Nikkei position performs unexpectedly, UBS ETF 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 UBS ETF will offset losses from the drop in UBS ETF's long position.| Xtrackers Nikkei vs. Xtrackers II Global | Xtrackers Nikkei vs. Xtrackers FTSE | Xtrackers Nikkei vs. Xtrackers SP 500 | Xtrackers Nikkei vs. Xtrackers MSCI |
| UBS ETF vs. UBS Barclays Liquid | UBS ETF vs. UBS ETF Public | UBS ETF vs. UBS ETF SICAV | UBS ETF vs. UBS Fund Solutions |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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