Correlation Between UBS Fund and UBS ETF

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

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

Diversification Opportunities for UBS Fund and UBS ETF

0.57

Correlation Coefficient

UBS Fund  UBS ETF

Very weak diversification

The 3 months correlation between UBS and UBS is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding UBS Fund Solutions and UBS ETF SICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF SICAV and UBS Fund 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 Fund Solutions are associated (or correlated) with UBS ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETF SICAV has no effect on the direction of UBS Fund i.e., UBS Fund and UBS ETF go up and down completely randomly.

Pair Corralation between UBS Fund and UBS ETF

Assuming the 90 days trading horizon UBS Fund is expected to generate 4.16 times less return on investment than UBS ETF. In addition to that, UBS Fund is 1.12 times more volatile than UBS ETF SICAV. It trades about 0.04 of its total potential returns per unit of risk. UBS ETF SICAV is currently generating about 0.19 per unit of volatility. If you would invest  8,263  in UBS ETF SICAV on December 28, 2024 and sell it today you would earn a total of  750.00  from holding UBS ETF SICAV or generate 9.08% return on investment over 90 days.

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

UBS Fund Solutions  vs.  UBS ETF SICAV

UBS Fund Solutions

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Fund Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, UBS Fund is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

UBS ETF SICAV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBS ETF SICAV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, UBS ETF may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with UBS Fund and UBS ETF

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

The idea behind UBS Fund Solutions and UBS ETF SICAV 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.