Correlation Between Amazon and UBS Fund

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

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

Diversification Opportunities for Amazon and UBS Fund

0.27

Correlation Coefficient

Amazon  UBS Fund

Modest diversification

The 3 months correlation between Amazon and UBS is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and UBS Fund Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Fund Solutions and Amazon 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 Amazon Inc are associated (or correlated) with UBS Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Fund Solutions has no effect on the direction of Amazon i.e., Amazon and UBS Fund go up and down completely randomly.

Pair Corralation between Amazon and UBS Fund

Given the investment horizon of 90 days Amazon Inc is expected to under-perform the UBS Fund. In addition to that, Amazon is 2.04 times more volatile than UBS Fund Solutions. It trades about -0.08 of its total potential returns per unit of risk. UBS Fund Solutions is currently generating about 0.04 per unit of volatility. If you would invest  5,160  in UBS Fund Solutions on December 28, 2024 and sell it today you would earn a total of  100.00  from holding UBS Fund Solutions or generate 1.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Amazon Inc  vs.  UBS Fund Solutions

Amazon Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Amazon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

UBS Fund Solutions

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Fund Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, UBS Fund is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Amazon and UBS Fund

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

The idea behind Amazon Inc and UBS Fund Solutions 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.