Correlation Between UBSFund Solutions and Vanguard

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

By analyzing existing cross correlation between UBSFund Solutions JP and Vanguard SP 500, you can compare the effects of market volatilities on UBSFund Solutions and Vanguard 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 UBSFund Solutions with a short position of Vanguard. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBSFund Solutions and Vanguard.

Diversification Opportunities for UBSFund Solutions and Vanguard

-0.61

Correlation Coefficient

UBSFund Solutions  Vanguard

Excellent diversification

The 3 months correlation between UBSFund and Vanguard is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding UBSFund Solutions JP and Vanguard SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP 500 and UBSFund Solutions 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 UBSFund Solutions JP are associated (or correlated) with Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP 500 has no effect on the direction of UBSFund Solutions i.e., UBSFund Solutions and Vanguard go up and down completely randomly.

Pair Corralation between UBSFund Solutions and Vanguard

Assuming the 90 days trading horizon UBSFund Solutions JP is expected to generate 0.28 times more return on investment than Vanguard. However, UBSFund Solutions JP is 3.57 times less risky than Vanguard. It trades about 0.24 of its potential returns per unit of risk. Vanguard SP 500 is currently generating about -0.07 per unit of risk. If you would invest  1,594  in UBSFund Solutions JP on December 25, 2024 and sell it today you would earn a total of  75.00  from holding UBSFund Solutions JP or generate 4.71% return on investment over 90 days.

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

UBSFund Solutions JP  vs.  Vanguard SP 500

UBSFund Solutions

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBSFund Solutions JP are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, UBSFund Solutions is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard SP 500

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Vanguard is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with UBSFund Solutions and Vanguard

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

The idea behind UBSFund Solutions JP and Vanguard SP 500 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.