Correlation Between ETRACS 2xMonthly and UBS AG

Can any of the company-specific risk be diversified away by investing in both ETRACS 2xMonthly 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 ETRACS 2xMonthly and UBS AG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ETRACS 2xMonthly Pay and UBS AG London, you can compare the effects of market volatilities on ETRACS 2xMonthly 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 ETRACS 2xMonthly with a short position of UBS AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS 2xMonthly and UBS AG.

Diversification Opportunities for ETRACS 2xMonthly and UBS AG

-0.51

Correlation Coefficient

ETRACS 2xMonthly  UBS AG

Excellent diversification

The 3 months correlation between ETRACS and UBS is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS 2xMonthly Pay 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 ETRACS 2xMonthly 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 ETRACS 2xMonthly Pay 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 ETRACS 2xMonthly i.e., ETRACS 2xMonthly and UBS AG go up and down completely randomly.

Pair Corralation between ETRACS 2xMonthly and UBS AG

Given the investment horizon of 90 days ETRACS 2xMonthly is expected to generate 2.28 times less return on investment than UBS AG. In addition to that, ETRACS 2xMonthly is 2.66 times more volatile than UBS AG London. It trades about 0.1 of its total potential returns per unit of risk. UBS AG London is currently generating about 0.59 per unit of volatility. If you would invest  1,841  in UBS AG London on October 26, 2024 and sell it today you would earn a total of  186.70  from holding UBS AG London or generate 10.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

ETRACS 2xMonthly Pay  vs.  UBS AG London

ETRACS 2xMonthly Pay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETRACS 2xMonthly Pay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, ETRACS 2xMonthly is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

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 somewhat weak basic indicators, UBS AG sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ETRACS 2xMonthly and UBS AG

The main advantage of trading using opposite ETRACS 2xMonthly and UBS AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS 2xMonthly 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 ETRACS 2xMonthly Pay 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.