Correlation Between Xtrackers and UBS ETF

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

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

Diversification Opportunities for Xtrackers and UBS ETF

0.03

Correlation Coefficient

Xtrackers  UBS ETF

Significant diversification

The 3 months correlation between Xtrackers and UBS is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers II and UBS ETF SICAV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF SICAV and Xtrackers 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 Xtrackers II are associated (or correlated) with UBS ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETF SICAV has no effect on the direction of Xtrackers i.e., Xtrackers and UBS ETF go up and down completely randomly.

Pair Corralation between Xtrackers and UBS ETF

Assuming the 90 days trading horizon Xtrackers II is expected to under-perform the UBS ETF. In addition to that, Xtrackers is 1.06 times more volatile than UBS ETF SICAV. It trades about -0.06 of its total potential returns per unit of risk. UBS ETF SICAV is currently generating about 0.17 per unit of volatility. If you would invest  8,263  in UBS ETF SICAV on December 30, 2024 and sell it today you would earn a total of  687.00  from holding UBS ETF SICAV or generate 8.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Xtrackers II   vs.  UBS ETF SICAV

Xtrackers II

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtrackers II has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Xtrackers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

UBS ETF SICAV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBS ETF SICAV are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, UBS ETF may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Xtrackers and UBS ETF

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

The idea behind Xtrackers II and UBS ETF SICAV 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 Transaction History module to view history of all your transactions and understand their impact on performance.