Correlation Between UBS ETRACS and Invesco DWA
Can any of the company-specific risk be diversified away by investing in both UBS ETRACS and Invesco DWA 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 Invesco DWA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS ETRACS and Invesco DWA Industrials, you can compare the effects of market volatilities on UBS ETRACS and Invesco DWA 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 Invesco DWA. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETRACS and Invesco DWA.
Diversification Opportunities for UBS ETRACS and Invesco DWA
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UBS and Invesco is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and Invesco DWA Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DWA Industrials 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 Invesco DWA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DWA Industrials has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and Invesco DWA go up and down completely randomly.
Pair Corralation between UBS ETRACS and Invesco DWA
Given the investment horizon of 90 days UBS ETRACS is expected to generate 2.56 times more return on investment than Invesco DWA. However, UBS ETRACS is 2.56 times more volatile than Invesco DWA Industrials. It trades about 0.64 of its potential returns per unit of risk. Invesco DWA Industrials is currently generating about -0.43 per unit of risk. If you would invest 1,515 in UBS ETRACS on September 23, 2024 and sell it today you would earn a total of 821.00 from holding UBS ETRACS or generate 54.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
UBS ETRACS vs. Invesco DWA Industrials
Performance |
Timeline |
UBS ETRACS |
Invesco DWA Industrials |
UBS ETRACS and Invesco DWA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UBS ETRACS and Invesco DWA
The main advantage of trading using opposite UBS ETRACS and Invesco DWA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETRACS position performs unexpectedly, Invesco DWA 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 Invesco DWA will offset losses from the drop in Invesco DWA's long position.UBS ETRACS vs. ProShares Ultra Bloomberg | UBS ETRACS vs. Direxion Daily Semiconductor | UBS ETRACS vs. Direxion Daily SP |
Invesco DWA vs. Invesco DWA Consumer | Invesco DWA vs. Invesco DWA Basic | Invesco DWA vs. Invesco DWA Consumer | Invesco DWA vs. Invesco DWA Financial |
Check out your portfolio center.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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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