Correlation Between Source KBW and UBS Fund

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

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

Diversification Opportunities for Source KBW and UBS Fund

0.58

Correlation Coefficient

Source KBW  UBS Fund

Very weak diversification

The 3 months correlation between Source and UBS is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Source KBW NASDAQ and UBS Fund Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Fund Solutions and Source KBW 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 Source KBW NASDAQ are associated (or correlated) with UBS Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Fund Solutions has no effect on the direction of Source KBW i.e., Source KBW and UBS Fund go up and down completely randomly.

Pair Corralation between Source KBW and UBS Fund

Assuming the 90 days trading horizon Source KBW NASDAQ is expected to under-perform the UBS Fund. But the etf apears to be less risky and, when comparing its historical volatility, Source KBW NASDAQ is 1.11 times less risky than UBS Fund. The etf trades about -0.32 of its potential returns per unit of risk. The UBS Fund Solutions is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  5,147  in UBS Fund Solutions on September 27, 2024 and sell it today you would lose (13.00) from holding UBS Fund Solutions or give up 0.25% of portfolio value over 90 days.

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

Source KBW NASDAQ  vs.  UBS Fund Solutions

Source KBW NASDAQ

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Source KBW NASDAQ are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward-looking signals, Source KBW exhibited solid returns over the last few months and may actually be approaching a breakup point.

UBS Fund Solutions

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Fund Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, UBS Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Source KBW and UBS Fund

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

The idea behind Source KBW NASDAQ and UBS Fund Solutions 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..