Correlation Between UBS ETF and Legal General

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

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

Diversification Opportunities for UBS ETF and Legal General

0.44

Correlation Coefficient

UBS ETF  Legal General

Very weak diversification

The 3 months correlation between UBS and Legal is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETF Public and Legal General UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legal General UCITS and UBS ETF 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 ETF Public are associated (or correlated) with Legal General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legal General UCITS has no effect on the direction of UBS ETF i.e., UBS ETF and Legal General go up and down completely randomly.

Pair Corralation between UBS ETF and Legal General

Assuming the 90 days trading horizon UBS ETF Public is expected to generate 0.57 times more return on investment than Legal General. However, UBS ETF Public is 1.77 times less risky than Legal General. It trades about 0.03 of its potential returns per unit of risk. Legal General UCITS is currently generating about -0.13 per unit of risk. If you would invest  2,258  in UBS ETF Public on December 27, 2024 and sell it today you would earn a total of  27.00  from holding UBS ETF Public or generate 1.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

UBS ETF Public  vs.  Legal General UCITS

UBS ETF Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UBS ETF Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, UBS ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Legal General UCITS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Legal General UCITS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with UBS ETF and Legal General

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

The idea behind UBS ETF Public and Legal General UCITS 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.