Correlation Between UBS Plc and VanEck Crypto

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

By analyzing existing cross correlation between UBS plc and VanEck Crypto Blockchain, you can compare the effects of market volatilities on UBS Plc and VanEck Crypto 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 VanEck Crypto. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Plc and VanEck Crypto.

Diversification Opportunities for UBS Plc and VanEck Crypto

0.93

Correlation Coefficient

UBS Plc  VanEck Crypto

Almost no diversification

The 3 months correlation between UBS and VanEck is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding UBS plc and VanEck Crypto Blockchain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Crypto Blockchain 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 VanEck Crypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Crypto Blockchain has no effect on the direction of UBS Plc i.e., UBS Plc and VanEck Crypto go up and down completely randomly.

Pair Corralation between UBS Plc and VanEck Crypto

Assuming the 90 days trading horizon UBS Plc is expected to generate 8.74 times less return on investment than VanEck Crypto. But when comparing it to its historical volatility, UBS plc is 5.93 times less risky than VanEck Crypto. It trades about 0.19 of its potential returns per unit of risk. VanEck Crypto Blockchain is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  680.00  in VanEck Crypto Blockchain on September 8, 2024 and sell it today you would earn a total of  695.00  from holding VanEck Crypto Blockchain or generate 102.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

UBS plc   vs.  VanEck Crypto Blockchain

UBS plc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBS plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, UBS Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VanEck Crypto Blockchain

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VanEck Crypto Blockchain are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, VanEck Crypto unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UBS Plc and VanEck Crypto

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

The idea behind UBS plc and VanEck Crypto Blockchain 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.