Correlation Between Financials Ultrasector and Ubs Sustainable

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

By analyzing existing cross correlation between Financials Ultrasector Profund and Ubs Sustainable Development, you can compare the effects of market volatilities on Financials Ultrasector and Ubs Sustainable 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 Financials Ultrasector with a short position of Ubs Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financials Ultrasector and Ubs Sustainable.

Diversification Opportunities for Financials Ultrasector and Ubs Sustainable

0.01

Correlation Coefficient

Financials Ultrasector  Ubs Sustainable

Significant diversification

The 3 months correlation between Financials and Ubs is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Financials Ultrasector Profund and Ubs Sustainable Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubs Sustainable Deve and Financials Ultrasector 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 Financials Ultrasector Profund are associated (or correlated) with Ubs Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubs Sustainable Deve has no effect on the direction of Financials Ultrasector i.e., Financials Ultrasector and Ubs Sustainable go up and down completely randomly.

Pair Corralation between Financials Ultrasector and Ubs Sustainable

Assuming the 90 days horizon Financials Ultrasector Profund is expected to generate 6.94 times more return on investment than Ubs Sustainable. However, Financials Ultrasector is 6.94 times more volatile than Ubs Sustainable Development. It trades about 0.03 of its potential returns per unit of risk. Ubs Sustainable Development is currently generating about 0.15 per unit of risk. If you would invest  4,144  in Financials Ultrasector Profund on December 30, 2024 and sell it today you would earn a total of  92.00  from holding Financials Ultrasector Profund or generate 2.22% return on investment over 90 days.

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

Financials Ultrasector Profund  vs.  Ubs Sustainable Development

Financials Ultrasector

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Financials Ultrasector Profund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Financials Ultrasector is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ubs Sustainable Deve

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ubs Sustainable Development are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ubs Sustainable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Financials Ultrasector and Ubs Sustainable

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

The idea behind Financials Ultrasector Profund and Ubs Sustainable Development 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.