Correlation Between ZKB Gold and UBSFund Solutions

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

By analyzing existing cross correlation between ZKB Gold ETF and UBSFund Solutions MSCI, you can compare the effects of market volatilities on ZKB Gold and UBSFund Solutions 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 ZKB Gold with a short position of UBSFund Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZKB Gold and UBSFund Solutions.

Diversification Opportunities for ZKB Gold and UBSFund Solutions

0.11

Correlation Coefficient

ZKB Gold  UBSFund Solutions

Average diversification

The 3 months correlation between ZKB and UBSFund is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding ZKB Gold ETF and UBSFund Solutions MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBSFund Solutions MSCI and ZKB Gold 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 ZKB Gold ETF are associated (or correlated) with UBSFund Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBSFund Solutions MSCI has no effect on the direction of ZKB Gold i.e., ZKB Gold and UBSFund Solutions go up and down completely randomly.

Pair Corralation between ZKB Gold and UBSFund Solutions

Assuming the 90 days trading horizon ZKB Gold ETF is expected to generate 0.56 times more return on investment than UBSFund Solutions. However, ZKB Gold ETF is 1.78 times less risky than UBSFund Solutions. It trades about 0.16 of its potential returns per unit of risk. UBSFund Solutions MSCI is currently generating about 0.01 per unit of risk. If you would invest  62,800  in ZKB Gold ETF on October 25, 2024 and sell it today you would earn a total of  11,640  from holding ZKB Gold ETF or generate 18.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.69%
Values	Daily Returns

ZKB Gold ETF  vs.  UBSFund Solutions MSCI

ZKB Gold ETF

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ZKB Gold ETF are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, ZKB Gold is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

UBSFund Solutions MSCI

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UBSFund Solutions MSCI are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, UBSFund Solutions may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ZKB Gold and UBSFund Solutions

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

The idea behind ZKB Gold ETF and UBSFund Solutions MSCI 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.