Correlation Between Absolute Core and UBS

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

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

Diversification Opportunities for Absolute Core and UBS

0.24

Correlation Coefficient

Absolute Core  UBS

Modest diversification

The 3 months correlation between Absolute and UBS is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Core Strategy and UBS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS and Absolute Core 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 Absolute Core Strategy are associated (or correlated) with UBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS has no effect on the direction of Absolute Core i.e., Absolute Core and UBS go up and down completely randomly.

Pair Corralation between Absolute Core and UBS

If you would invest  3,232  in Absolute Core Strategy on September 12, 2024 and sell it today you would earn a total of  23.00  from holding Absolute Core Strategy or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Absolute Core Strategy  vs.  UBS

Absolute Core Strategy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Absolute Core Strategy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Absolute Core is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

UBS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, UBS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Absolute Core and UBS

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

The idea behind Absolute Core Strategy and UBS 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.