Correlation Between UBS ETRACS and T Rowe

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

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

Diversification Opportunities for UBS ETRACS and T Rowe

0.07

Correlation Coefficient

UBS ETRACS  T Rowe

Significant diversification

The 3 months correlation between UBS and TCHP is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and T Rowe go up and down completely randomly.

Pair Corralation between UBS ETRACS and T Rowe

Given the investment horizon of 90 days UBS ETRACS is expected to under-perform the T Rowe. In addition to that, UBS ETRACS is 5.19 times more volatile than T Rowe Price. It trades about -0.04 of its total potential returns per unit of risk. T Rowe Price is currently generating about -0.08 per unit of volatility. If you would invest  4,355  in T Rowe Price on December 25, 2024 and sell it today you would lose (329.00) from holding T Rowe Price or give up 7.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

UBS ETRACS   vs.  T Rowe Price

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.

T Rowe Price

Risk-Adjusted Performance

Very Weak

Over the last 90 days T Rowe Price has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Etf's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Pair Trading with UBS ETRACS and T Rowe

The main advantage of trading using opposite UBS ETRACS and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETRACS position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.

The idea behind UBS ETRACS and T Rowe Price 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 Commodity Directory module to find actively traded commodities issued by global exchanges.