Correlation Between WisdomTree NASDAQ and UBS Plc
Can any of the company-specific risk be diversified away by investing in both WisdomTree NASDAQ and UBS Plc 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 WisdomTree NASDAQ and UBS Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree NASDAQ 100 and UBS plc , you can compare the effects of market volatilities on WisdomTree NASDAQ and UBS Plc 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 WisdomTree NASDAQ with a short position of UBS Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree NASDAQ and UBS Plc.
Diversification Opportunities for WisdomTree NASDAQ and UBS Plc
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WisdomTree and UBS is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree NASDAQ 100 and UBS plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS plc and WisdomTree NASDAQ 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 WisdomTree NASDAQ 100 are associated (or correlated) with UBS Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS plc has no effect on the direction of WisdomTree NASDAQ i.e., WisdomTree NASDAQ and UBS Plc go up and down completely randomly.
Pair Corralation between WisdomTree NASDAQ and UBS Plc
Assuming the 90 days trading horizon WisdomTree NASDAQ 100 is expected to generate 3.65 times more return on investment than UBS Plc. However, WisdomTree NASDAQ is 3.65 times more volatile than UBS plc . It trades about 0.11 of its potential returns per unit of risk. UBS plc is currently generating about 0.08 per unit of risk. If you would invest 24,864 in WisdomTree NASDAQ 100 on September 9, 2024 and sell it today you would earn a total of 1,376 from holding WisdomTree NASDAQ 100 or generate 5.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
WisdomTree NASDAQ 100 vs. UBS plc
Performance |
Timeline |
WisdomTree NASDAQ 100 |
UBS plc |
WisdomTree NASDAQ and UBS Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WisdomTree NASDAQ and UBS Plc
The main advantage of trading using opposite WisdomTree NASDAQ and UBS Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree NASDAQ position performs unexpectedly, UBS Plc 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 Plc will offset losses from the drop in UBS Plc's long position.WisdomTree NASDAQ vs. WisdomTree Zinc | WisdomTree NASDAQ vs. WisdomTree Brent Crude | WisdomTree NASDAQ vs. WisdomTree Aluminium 2x | WisdomTree NASDAQ vs. WisdomTree Enhanced Commodity |
Check out your portfolio center.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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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