Correlation Between Ab High and Ubs Allocation

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

By analyzing existing cross correlation between Ab High Income and Ubs Allocation Fund, you can compare the effects of market volatilities on Ab High and Ubs Allocation 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 Ab High with a short position of Ubs Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab High and Ubs Allocation.

Diversification Opportunities for Ab High and Ubs Allocation

0.81

Correlation Coefficient

Ab High  Ubs Allocation

Very poor diversification

The 3 months correlation between AGDAX and Ubs is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ab High Income and Ubs Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubs Allocation and Ab High 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 Ab High Income are associated (or correlated) with Ubs Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubs Allocation has no effect on the direction of Ab High i.e., Ab High and Ubs Allocation go up and down completely randomly.

Pair Corralation between Ab High and Ubs Allocation

Assuming the 90 days horizon Ab High is expected to generate 3.58 times less return on investment than Ubs Allocation. But when comparing it to its historical volatility, Ab High Income is 3.13 times less risky than Ubs Allocation. It trades about 0.19 of its potential returns per unit of risk. Ubs Allocation Fund is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  5,109  in Ubs Allocation Fund on September 3, 2024 and sell it today you would earn a total of  349.00  from holding Ubs Allocation Fund or generate 6.83% return on investment over 90 days.

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

Ab High Income  vs.  Ubs Allocation Fund

Ab High Income

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ab High Income are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ab High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ubs Allocation

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ubs Allocation Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ubs Allocation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ab High and Ubs Allocation

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

The idea behind Ab High Income and Ubs Allocation Fund 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.