Correlation Between Health Care and Ubs Total

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

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

Diversification Opportunities for Health Care and Ubs Total

0.45

Correlation Coefficient

Health Care  Ubs Total

Very weak diversification

The 3 months correlation between Health and Ubs is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Fund and Ubs Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubs Total Return and Health Care 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 Health Care Fund are associated (or correlated) with Ubs Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubs Total Return has no effect on the direction of Health Care i.e., Health Care and Ubs Total go up and down completely randomly.

Pair Corralation between Health Care and Ubs Total

Assuming the 90 days horizon Health Care Fund is expected to generate 4.03 times more return on investment than Ubs Total. However, Health Care is 4.03 times more volatile than Ubs Total Return. It trades about 0.06 of its potential returns per unit of risk. Ubs Total Return is currently generating about 0.11 per unit of risk. If you would invest  8,568  in Health Care Fund on December 28, 2024 and sell it today you would earn a total of  230.00  from holding Health Care Fund or generate 2.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Health Care Fund  vs.  Ubs Total Return

Health Care Fund

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Health Care Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Health Care is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ubs Total Return

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ubs Total Return are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ubs Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Health Care and Ubs Total

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

The idea behind Health Care Fund and Ubs Total Return 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.