Correlation Between T Rex and UBS ETRACS

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Can any of the company-specific risk be diversified away by investing in both T Rex and UBS ETRACS 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 T Rex and UBS ETRACS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between T Rex 2X Long and UBS ETRACS , you can compare the effects of market volatilities on T Rex and UBS ETRACS 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 T Rex with a short position of UBS ETRACS. Check out your portfolio center. Please also check ongoing floating volatility patterns of T Rex and UBS ETRACS.

Diversification Opportunities for T Rex and UBS ETRACS

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between NVDX and UBS is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding T Rex 2X Long and UBS ETRACS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETRACS and T Rex 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 T Rex 2X Long are associated (or correlated) with UBS ETRACS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETRACS has no effect on the direction of T Rex i.e., T Rex and UBS ETRACS go up and down completely randomly.

Pair Corralation between T Rex and UBS ETRACS

Given the investment horizon of 90 days T Rex 2X Long is expected to under-perform the UBS ETRACS. In addition to that, T Rex is 1.1 times more volatile than UBS ETRACS . It trades about -0.07 of its total potential returns per unit of risk. UBS ETRACS is currently generating about -0.05 per unit of volatility. If you would invest  2,232  in UBS ETRACS on December 26, 2024 and sell it today you would lose (708.00) from holding UBS ETRACS or give up 31.72% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

T Rex 2X Long  vs.  UBS ETRACS

 Performance 
       Timeline  
T Rex 2X 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days T Rex 2X Long has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.
UBS ETRACS 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days UBS ETRACS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

T Rex and UBS ETRACS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with T Rex and UBS ETRACS

The main advantage of trading using opposite T Rex and UBS ETRACS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rex position performs unexpectedly, UBS ETRACS 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 ETRACS will offset losses from the drop in UBS ETRACS's long position.
The idea behind T Rex 2X Long and UBS ETRACS 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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