Correlation Between UBS Property and GOOD BUILDINGS

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

By analyzing existing cross correlation between UBS Property and GOOD BUILDINGS Swiss, you can compare the effects of market volatilities on UBS Property and GOOD BUILDINGS 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 Property with a short position of GOOD BUILDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Property and GOOD BUILDINGS.

Diversification Opportunities for UBS Property and GOOD BUILDINGS

0.69

Correlation Coefficient

UBS Property  GOOD BUILDINGS

Poor diversification

The 3 months correlation between UBS and GOOD is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding UBS Property and GOOD BUILDINGS Swiss in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOOD BUILDINGS Swiss and UBS Property 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 Property are associated (or correlated) with GOOD BUILDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOOD BUILDINGS Swiss has no effect on the direction of UBS Property i.e., UBS Property and GOOD BUILDINGS go up and down completely randomly.

Pair Corralation between UBS Property and GOOD BUILDINGS

Assuming the 90 days trading horizon UBS Property is expected to generate 2.06 times less return on investment than GOOD BUILDINGS. But when comparing it to its historical volatility, UBS Property is 1.28 times less risky than GOOD BUILDINGS. It trades about 0.24 of its potential returns per unit of risk. GOOD BUILDINGS Swiss is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  14,350  in GOOD BUILDINGS Swiss on September 30, 2024 and sell it today you would earn a total of  1,150  from holding GOOD BUILDINGS Swiss or generate 8.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

UBS Property  vs.  GOOD BUILDINGS Swiss

UBS Property

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Property are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly abnormal basic indicators, UBS Property may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GOOD BUILDINGS Swiss

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GOOD BUILDINGS Swiss are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly sluggish basic indicators, GOOD BUILDINGS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with UBS Property and GOOD BUILDINGS

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

The idea behind UBS Property and GOOD BUILDINGS Swiss 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..