Correlation Between Inflation Protected and Ubs Total

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

By analyzing existing cross correlation between Inflation Protected Bond Fund and Ubs Total Return, you can compare the effects of market volatilities on Inflation Protected and Ubs Total 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 Inflation Protected with a short position of Ubs Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation Protected and Ubs Total.

Diversification Opportunities for Inflation Protected and Ubs Total

0.47

Correlation Coefficient

Inflation Protected  Ubs Total

Very weak diversification

The 3 months correlation between Inflation and Ubs is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected Bond Fund and Ubs Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubs Total Return and Inflation Protected 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 Inflation Protected Bond Fund are associated (or correlated) with Ubs Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubs Total Return has no effect on the direction of Inflation Protected i.e., Inflation Protected and Ubs Total go up and down completely randomly.

Pair Corralation between Inflation Protected and Ubs Total

Assuming the 90 days horizon Inflation Protected Bond Fund is expected to under-perform the Ubs Total. In addition to that, Inflation Protected is 2.06 times more volatile than Ubs Total Return. It trades about -0.02 of its total potential returns per unit of risk. Ubs Total Return is currently generating about 0.16 per unit of volatility. If you would invest  1,308  in Ubs Total Return on December 26, 2024 and sell it today you would earn a total of  26.00  from holding Ubs Total Return or generate 1.99% return on investment over 90 days.

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

Inflation Protected Bond Fund  vs.  Ubs Total Return

Inflation Protected

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inflation Protected Bond Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Inflation Protected is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ubs Total Return

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ubs Total Return are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ubs Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Inflation Protected and Ubs Total

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

The idea behind Inflation Protected Bond Fund and Ubs Total Return 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.