Correlation Between Ubs Allocation and Pace Large

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

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

Diversification Opportunities for Ubs Allocation and Pace Large

0.86

Correlation Coefficient

Ubs Allocation  Pace Large

Very poor diversification

The 3 months correlation between Ubs and Pace is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ubs Allocation Fund and Pace Large Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Large Growth and Ubs Allocation 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 Ubs Allocation Fund are associated (or correlated) with Pace Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Large Growth has no effect on the direction of Ubs Allocation i.e., Ubs Allocation and Pace Large go up and down completely randomly.

Pair Corralation between Ubs Allocation and Pace Large

Assuming the 90 days horizon Ubs Allocation Fund is expected to generate 0.59 times more return on investment than Pace Large. However, Ubs Allocation Fund is 1.69 times less risky than Pace Large. It trades about -0.06 of its potential returns per unit of risk. Pace Large Growth is currently generating about -0.07 per unit of risk. If you would invest  5,068  in Ubs Allocation Fund on December 28, 2024 and sell it today you would lose (133.00) from holding Ubs Allocation Fund or give up 2.62% of portfolio value over 90 days.

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

Ubs Allocation Fund  vs.  Pace Large Growth

Ubs Allocation

Risk-Adjusted Performance

Very Weak

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

Pace Large Growth

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ubs Allocation and Pace Large

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

The idea behind Ubs Allocation Fund and Pace Large Growth 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.