Correlation Between UBS ETRACS and BSDE

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

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

Diversification Opportunities for UBS ETRACS and BSDE

0.14

Correlation Coefficient

UBS ETRACS  BSDE

Average diversification

The 3 months correlation between UBS and BSDE is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and BSDE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSDE and UBS ETRACS 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 ETRACS are associated (or correlated) with BSDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSDE has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and BSDE go up and down completely randomly.

Pair Corralation between UBS ETRACS and BSDE

Given the investment horizon of 90 days UBS ETRACS is expected to under-perform the BSDE. But the etf apears to be less risky and, when comparing its historical volatility, UBS ETRACS is 26.11 times less risky than BSDE. The etf trades about -0.01 of its potential returns per unit of risk. The BSDE is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,391  in BSDE on October 22, 2024 and sell it today you would earn a total of  107,109  from holding BSDE or generate 4479.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	19.79%
Values	Daily Returns

UBS ETRACS   vs.  BSDE

UBS ETRACS

Risk-Adjusted Performance

0 of 100

Very Weak

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

BSDE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BSDE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, BSDE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with UBS ETRACS and BSDE

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

The idea behind UBS ETRACS and BSDE 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..