Correlation Between Barclays ETN and UBS AG

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

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

Diversification Opportunities for Barclays ETN and UBS AG

0.89

Correlation Coefficient

Barclays ETN  UBS AG

Very poor diversification

The 3 months correlation between Barclays and UBS is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Barclays ETN Select and UBS AG London in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS AG London and Barclays ETN 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 Barclays ETN Select are associated (or correlated) with UBS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS AG London has no effect on the direction of Barclays ETN i.e., Barclays ETN and UBS AG go up and down completely randomly.

Pair Corralation between Barclays ETN and UBS AG

Given the investment horizon of 90 days Barclays ETN is expected to generate 1.39 times less return on investment than UBS AG. In addition to that, Barclays ETN is 1.08 times more volatile than UBS AG London. It trades about 0.12 of its total potential returns per unit of risk. UBS AG London is currently generating about 0.18 per unit of volatility. If you would invest  1,816  in UBS AG London on December 28, 2024 and sell it today you would earn a total of  238.00  from holding UBS AG London or generate 13.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

Barclays ETN Select  vs.  UBS AG London

Barclays ETN Select

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barclays ETN Select are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Barclays ETN may actually be approaching a critical reversion point that can send shares even higher in April 2025.

UBS AG London

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBS AG London are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UBS AG sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barclays ETN and UBS AG

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

The idea behind Barclays ETN Select and UBS AG London 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.