Correlation Between Ubs Us and Ubs Allocation

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

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

Diversification Opportunities for Ubs Us and Ubs Allocation

0.86

Correlation Coefficient

Ubs Us  Ubs Allocation

Very poor diversification

The 3 months correlation between Ubs and Ubs is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ubs Small Cap and Ubs Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubs Allocation and Ubs Us 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 Small Cap 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 Ubs Us i.e., Ubs Us and Ubs Allocation go up and down completely randomly.

Pair Corralation between Ubs Us and Ubs Allocation

Assuming the 90 days horizon Ubs Small Cap is expected to under-perform the Ubs Allocation. In addition to that, Ubs Us is 2.11 times more volatile than Ubs Allocation Fund. It trades about -0.15 of its total potential returns per unit of risk. Ubs Allocation Fund is currently generating about -0.06 per unit of volatility. If you would invest  4,944  in Ubs Allocation Fund on December 27, 2024 and sell it today you would lose (143.00) from holding Ubs Allocation Fund or give up 2.89% of portfolio value over 90 days.

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

Ubs Small Cap  vs.  Ubs Allocation Fund

Ubs Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ubs Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Ubs Allocation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ubs Allocation Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ubs Allocation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ubs Us and Ubs Allocation

The main advantage of trading using opposite Ubs Us and Ubs Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ubs Us 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 Ubs Small Cap 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.