Correlation Between LG DAX and UBS ETF

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

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

Diversification Opportunities for LG DAX and UBS ETF

-0.77

Correlation Coefficient

LG DAX  UBS ETF

Pay attention - limited upside

The 3 months correlation between DES2 and UBS is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding LG DAX Daily and UBS ETF Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF Public and LG DAX 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 LG DAX Daily 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 Public has no effect on the direction of LG DAX i.e., LG DAX and UBS ETF go up and down completely randomly.

Pair Corralation between LG DAX and UBS ETF

Assuming the 90 days trading horizon LG DAX Daily is expected to under-perform the UBS ETF. In addition to that, LG DAX is 12.36 times more volatile than UBS ETF Public. It trades about -0.2 of its total potential returns per unit of risk. UBS ETF Public is currently generating about 0.4 per unit of volatility. If you would invest  1,036  in UBS ETF Public on September 5, 2024 and sell it today you would earn a total of  12.00  from holding UBS ETF Public or generate 1.16% return on investment over 90 days.

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

LG DAX Daily  vs.  UBS ETF Public

LG DAX Daily

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LG DAX Daily has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

UBS ETF Public

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBS ETF Public are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, UBS ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LG DAX and UBS ETF

The main advantage of trading using opposite LG DAX and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG DAX 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 LG DAX Daily and UBS ETF Public 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.

Check out your portfolio center.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.