Correlation Between UBS CH and UBS Institutional

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

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

Diversification Opportunities for UBS CH and UBS Institutional

-0.53

Correlation Coefficient

UBS CH  UBS Institutional

Excellent diversification

The 3 months correlation between UBS and UBS is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding UBS CH Property and UBS Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Institutional and UBS CH 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 CH Property are associated (or correlated) with UBS Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Institutional has no effect on the direction of UBS CH i.e., UBS CH and UBS Institutional go up and down completely randomly.

Pair Corralation between UBS CH and UBS Institutional

Assuming the 90 days trading horizon UBS CH Property is expected to generate 2.1 times more return on investment than UBS Institutional. However, UBS CH is 2.1 times more volatile than UBS Institutional. It trades about 0.1 of its potential returns per unit of risk. UBS Institutional is currently generating about -0.01 per unit of risk. If you would invest  1,335  in UBS CH Property on October 7, 2024 and sell it today you would earn a total of  35.00  from holding UBS CH Property or generate 2.62% return on investment over 90 days.

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

UBS CH Property  vs.  UBS Institutional

UBS CH Property

Risk-Adjusted Performance

0 of 100

Very Weak

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

UBS Institutional

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days UBS Institutional has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly abnormal forward indicators, UBS Institutional may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with UBS CH and UBS Institutional

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

The idea behind UBS CH Property and UBS Institutional 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.