Correlation Between UBS Plc and Invesco Markets

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

By analyzing existing cross correlation between UBS plc and Invesco Markets II, you can compare the effects of market volatilities on UBS Plc and Invesco Markets 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 Plc with a short position of Invesco Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Plc and Invesco Markets.

Diversification Opportunities for UBS Plc and Invesco Markets

-0.85

Correlation Coefficient

UBS Plc  Invesco Markets

Pay attention - limited upside

The 3 months correlation between UBS and Invesco is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding UBS plc and Invesco Markets II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Markets II and UBS Plc 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 plc are associated (or correlated) with Invesco Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Markets II has no effect on the direction of UBS Plc i.e., UBS Plc and Invesco Markets go up and down completely randomly.

Pair Corralation between UBS Plc and Invesco Markets

Assuming the 90 days trading horizon UBS plc is expected to generate 0.53 times more return on investment than Invesco Markets. However, UBS plc is 1.9 times less risky than Invesco Markets. It trades about 0.16 of its potential returns per unit of risk. Invesco Markets II is currently generating about -0.04 per unit of risk. If you would invest  6,732  in UBS plc on September 28, 2024 and sell it today you would earn a total of  2,492  from holding UBS plc or generate 37.02% return on investment over 90 days.

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

UBS plc   vs.  Invesco Markets II

UBS plc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBS plc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, UBS Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invesco Markets II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Markets II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Etf's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with UBS Plc and Invesco Markets

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

The idea behind UBS plc and Invesco Markets II 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.