Correlation Between Alerian Energy and UBS

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

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

Diversification Opportunities for Alerian Energy and UBS

0.0

Correlation Coefficient

Alerian Energy  UBS

Pay attention - limited upside

The 3 months correlation between Alerian and UBS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alerian Energy Infrastructure and UBS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS and Alerian Energy 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 Alerian Energy Infrastructure are associated (or correlated) with UBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS has no effect on the direction of Alerian Energy i.e., Alerian Energy and UBS go up and down completely randomly.

Pair Corralation between Alerian Energy and UBS

If you would invest  3,051  in Alerian Energy Infrastructure on December 27, 2024 and sell it today you would earn a total of  265.00  from holding Alerian Energy Infrastructure or generate 8.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Alerian Energy Infrastructure  vs.  UBS

Alerian Energy Infra

Risk-Adjusted Performance

OK

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

UBS

Risk-Adjusted Performance

Very Weak

Over the last 90 days UBS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, UBS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alerian Energy and UBS

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

The idea behind Alerian Energy Infrastructure and UBS 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..