Correlation Between Vanguard 500 and Ubs Money

Can any of the company-specific risk be diversified away by investing in both Vanguard 500 and Ubs Money 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 Vanguard 500 and Ubs Money into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vanguard 500 Index and Ubs Money Series, you can compare the effects of market volatilities on Vanguard 500 and Ubs Money 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 Vanguard 500 with a short position of Ubs Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard 500 and Ubs Money.

Diversification Opportunities for Vanguard 500 and Ubs Money

0.47

Correlation Coefficient

Vanguard 500  Ubs Money

Very weak diversification

The 3 months correlation between Vanguard and Ubs is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard 500 Index and Ubs Money Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubs Money Series and Vanguard 500 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 Vanguard 500 Index are associated (or correlated) with Ubs Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubs Money Series has no effect on the direction of Vanguard 500 i.e., Vanguard 500 and Ubs Money go up and down completely randomly.

Pair Corralation between Vanguard 500 and Ubs Money

Assuming the 90 days horizon Vanguard 500 Index is expected to generate 0.69 times more return on investment than Ubs Money. However, Vanguard 500 Index is 1.46 times less risky than Ubs Money. It trades about 0.12 of its potential returns per unit of risk. Ubs Money Series is currently generating about 0.01 per unit of risk. If you would invest  34,376  in Vanguard 500 Index on September 22, 2024 and sell it today you would earn a total of  19,917  from holding Vanguard 500 Index or generate 57.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.0%
Values	Daily Returns

Vanguard 500 Index  vs.  Ubs Money Series

Vanguard 500 Index

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard 500 Index are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard 500 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ubs Money Series

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ubs Money Series are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ubs Money is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard 500 and Ubs Money

The main advantage of trading using opposite Vanguard 500 and Ubs Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 500 position performs unexpectedly, Ubs Money 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 Money will offset losses from the drop in Ubs Money's long position.

The idea behind Vanguard 500 Index and Ubs Money Series 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.