Correlation Between UBS Vitainvest and UBS IF

Can any of the company-specific risk be diversified away by investing in both UBS Vitainvest and UBS IF 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 Vitainvest and UBS IF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UBS Vitainvest and UBS IF Eqs, you can compare the effects of market volatilities on UBS Vitainvest and UBS IF 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 Vitainvest with a short position of UBS IF. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Vitainvest and UBS IF.

Diversification Opportunities for UBS Vitainvest and UBS IF

-0.31

Correlation Coefficient

UBS Vitainvest  UBS IF

Very good diversification

The 3 months correlation between UBS and UBS is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding UBS Vitainvest and UBS IF Eqs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS IF Eqs and UBS Vitainvest 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 Vitainvest are associated (or correlated) with UBS IF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS IF Eqs has no effect on the direction of UBS Vitainvest i.e., UBS Vitainvest and UBS IF go up and down completely randomly.

Pair Corralation between UBS Vitainvest and UBS IF

Assuming the 90 days trading horizon UBS Vitainvest is expected to under-perform the UBS IF. But the fund apears to be less risky and, when comparing its historical volatility, UBS Vitainvest is 2.92 times less risky than UBS IF. The fund trades about -0.24 of its potential returns per unit of risk. The UBS IF Eqs is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  23,742  in UBS IF Eqs on October 7, 2024 and sell it today you would earn a total of  1.00  from holding UBS IF Eqs or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

UBS Vitainvest   vs.  UBS IF Eqs

UBS Vitainvest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS Vitainvest has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, UBS Vitainvest is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

UBS IF Eqs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS IF Eqs has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, UBS IF is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with UBS Vitainvest and UBS IF

The main advantage of trading using opposite UBS Vitainvest and UBS IF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Vitainvest position performs unexpectedly, UBS IF 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 IF will offset losses from the drop in UBS IF's long position.

The idea behind UBS Vitainvest and UBS IF Eqs pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.