Correlation Between UBS Group and Medical Properties

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

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

Diversification Opportunities for UBS Group and Medical Properties

-0.69

Correlation Coefficient

UBS Group  Medical Properties

Excellent diversification

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

Pair Corralation between UBS Group and Medical Properties

Assuming the 90 days trading horizon UBS Group AG is expected to generate 0.35 times more return on investment than Medical Properties. However, UBS Group AG is 2.86 times less risky than Medical Properties. It trades about 0.1 of its potential returns per unit of risk. Medical Properties Trust, is currently generating about -0.1 per unit of risk. If you would invest  18,100  in UBS Group AG on October 11, 2024 and sell it today you would earn a total of  1,683  from holding UBS Group AG or generate 9.3% return on investment over 90 days.

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

UBS Group AG  vs.  Medical Properties Trust,

UBS Group AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Group AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UBS Group may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Medical Properties Trust,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medical Properties Trust, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with UBS Group and Medical Properties

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

The idea behind UBS Group AG and Medical Properties Trust, 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.