Correlation Between UBS Property and UBS IF

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

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

Diversification Opportunities for UBS Property and UBS IF

-0.65

Correlation Coefficient

UBS Property  UBS IF

Excellent diversification

The 3 months correlation between UBS and UBS is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding UBS Property Direct and UBS IF Eqs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS IF Eqs and UBS Property 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 Property Direct are associated (or correlated) with UBS IF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS IF Eqs has no effect on the direction of UBS Property i.e., UBS Property and UBS IF go up and down completely randomly.

Pair Corralation between UBS Property and UBS IF

Assuming the 90 days trading horizon UBS Property Direct is expected to generate 0.94 times more return on investment than UBS IF. However, UBS Property Direct is 1.06 times less risky than UBS IF. It trades about 0.04 of its potential returns per unit of risk. UBS IF Eqs is currently generating about 0.01 per unit of risk. If you would invest  1,990  in UBS Property Direct on October 7, 2024 and sell it today you would earn a total of  10.00  from holding UBS Property Direct or generate 0.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

UBS Property Direct  vs.  UBS IF Eqs

UBS Property Direct

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS Property Direct has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable basic indicators, UBS Property is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

UBS IF Eqs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS IF Eqs has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, UBS IF is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with UBS Property and UBS IF

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

The idea behind UBS Property Direct and UBS IF Eqs 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.