Correlation Between UBS ETRACS and FT Vest

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

By analyzing existing cross correlation between UBS ETRACS and FT Vest NASDAQ 100, you can compare the effects of market volatilities on UBS ETRACS and FT Vest 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 FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETRACS and FT Vest.

Diversification Opportunities for UBS ETRACS and FT Vest

-0.43

Correlation Coefficient

UBS ETRACS  FT Vest

Very good diversification

The 3 months correlation between UBS and QCAP is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and FT Vest NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest NASDAQ 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 FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest NASDAQ has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and FT Vest go up and down completely randomly.

Pair Corralation between UBS ETRACS and FT Vest

Given the investment horizon of 90 days UBS ETRACS is expected to under-perform the FT Vest. In addition to that, UBS ETRACS is 17.6 times more volatile than FT Vest NASDAQ 100. It trades about -0.04 of its total potential returns per unit of risk. FT Vest NASDAQ 100 is currently generating about 0.02 per unit of volatility. If you would invest  2,214  in FT Vest NASDAQ 100 on December 23, 2024 and sell it today you would earn a total of  10.00  from holding FT Vest NASDAQ 100 or generate 0.45% 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.  FT Vest NASDAQ 100

UBS ETRACS

Risk-Adjusted Performance

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 uncertain performance in the last few months, the Etf's forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

FT Vest NASDAQ

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FT Vest NASDAQ 100 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, FT Vest is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with UBS ETRACS and FT Vest

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

The idea behind UBS ETRACS and FT Vest NASDAQ 100 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.