Correlation Between Baloise Holding and UBS Fund

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

By analyzing existing cross correlation between Baloise Holding AG and UBS Fund Solutions, you can compare the effects of market volatilities on Baloise Holding and UBS Fund 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 Baloise Holding with a short position of UBS Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baloise Holding and UBS Fund.

Diversification Opportunities for Baloise Holding and UBS Fund

0.67

Correlation Coefficient

Baloise Holding  UBS Fund

Poor diversification

The 3 months correlation between Baloise and UBS is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Baloise Holding AG and UBS Fund Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Fund Solutions and Baloise Holding 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 Baloise Holding AG are associated (or correlated) with UBS Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Fund Solutions has no effect on the direction of Baloise Holding i.e., Baloise Holding and UBS Fund go up and down completely randomly.

Pair Corralation between Baloise Holding and UBS Fund

Assuming the 90 days trading horizon Baloise Holding AG is expected to under-perform the UBS Fund. In addition to that, Baloise Holding is 1.02 times more volatile than UBS Fund Solutions. It trades about -0.1 of its total potential returns per unit of risk. UBS Fund Solutions is currently generating about 0.18 per unit of volatility. If you would invest  4,716  in UBS Fund Solutions on September 13, 2024 and sell it today you would earn a total of  118.00  from holding UBS Fund Solutions or generate 2.5% return on investment over 90 days.

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

Baloise Holding AG  vs.  UBS Fund Solutions

Baloise Holding AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baloise Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Baloise Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

UBS Fund Solutions

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Fund Solutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, UBS Fund is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Baloise Holding and UBS Fund

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

The idea behind Baloise Holding AG and UBS Fund Solutions 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.