Correlation Between UBS Fund and Xtrackers

Can any of the company-specific risk be diversified away by investing in both UBS Fund and Xtrackers 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 Xtrackers 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 Xtrackers II , you can compare the effects of market volatilities on UBS Fund and Xtrackers 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 Xtrackers. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Fund and Xtrackers.

Diversification Opportunities for UBS Fund and Xtrackers

0.43

Correlation Coefficient

UBS Fund  Xtrackers

Very weak diversification

The 3 months correlation between UBS and Xtrackers is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding UBS Fund Solutions and Xtrackers II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers II 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 Xtrackers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers II has no effect on the direction of UBS Fund i.e., UBS Fund and Xtrackers go up and down completely randomly.

Pair Corralation between UBS Fund and Xtrackers

Assuming the 90 days trading horizon UBS Fund Solutions is expected to generate 1.12 times more return on investment than Xtrackers. However, UBS Fund is 1.12 times more volatile than Xtrackers II . It trades about -0.01 of its potential returns per unit of risk. Xtrackers II is currently generating about -0.06 per unit of risk. If you would invest  5,160  in UBS Fund Solutions on December 30, 2024 and sell it today you would lose (49.00) from holding UBS Fund Solutions or give up 0.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

UBS Fund Solutions  vs.  Xtrackers II

UBS Fund Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days UBS Fund Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Xtrackers II

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers II has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Xtrackers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with UBS Fund and Xtrackers

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

The idea behind UBS Fund Solutions and Xtrackers 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.