Correlation Between Roundhill Investments and UBS AG

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

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

Diversification Opportunities for Roundhill Investments and UBS AG

0.87

Correlation Coefficient

Roundhill Investments  UBS AG

Very poor diversification

The 3 months correlation between Roundhill and UBS is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Investments and UBS AG London in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS AG London and Roundhill Investments 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 Roundhill Investments are associated (or correlated) with UBS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS AG London has no effect on the direction of Roundhill Investments i.e., Roundhill Investments and UBS AG go up and down completely randomly.

Pair Corralation between Roundhill Investments and UBS AG

Given the investment horizon of 90 days Roundhill Investments is expected to generate 1.3 times more return on investment than UBS AG. However, Roundhill Investments is 1.3 times more volatile than UBS AG London. It trades about 0.15 of its potential returns per unit of risk. UBS AG London is currently generating about 0.09 per unit of risk. If you would invest  2,497  in Roundhill Investments on September 22, 2024 and sell it today you would earn a total of  1,569  from holding Roundhill Investments or generate 62.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	28.46%
Values	Daily Returns

Roundhill Investments  vs.  UBS AG London

Roundhill Investments

Risk-Adjusted Performance

0 of 100

Very Weak

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

UBS AG London

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBS AG London are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, UBS AG disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Roundhill Investments and UBS AG

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

The idea behind Roundhill Investments and UBS AG London 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.