Correlation Between LYXOR DAILY and UBS ETF

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

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

Diversification Opportunities for LYXOR DAILY and UBS ETF

-0.78

Correlation Coefficient

LYXOR DAILY  UBS ETF

Pay attention - limited upside

The 3 months correlation between LYXOR and UBS is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding LYXOR DAILY SHORTDAX 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 LYXOR DAILY 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 LYXOR DAILY SHORTDAX 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 LYXOR DAILY i.e., LYXOR DAILY and UBS ETF go up and down completely randomly.

Pair Corralation between LYXOR DAILY and UBS ETF

Assuming the 90 days trading horizon LYXOR DAILY SHORTDAX is expected to under-perform the UBS ETF. In addition to that, LYXOR DAILY is 11.46 times more volatile than UBS ETF Public. It trades about -0.46 of its total potential returns per unit of risk. UBS ETF Public is currently generating about 0.27 per unit of volatility. If you would invest  1,042  in UBS ETF Public on September 13, 2024 and sell it today you would earn a total of  7.00  from holding UBS ETF Public or generate 0.67% return on investment over 90 days.

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

LYXOR DAILY SHORTDAX  vs.  UBS ETF Public

LYXOR DAILY SHORTDAX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LYXOR DAILY SHORTDAX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Etf's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the Exchange Traded Fund stockholders.

UBS ETF Public

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBS ETF Public are ranked lower than 18 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LYXOR DAILY and UBS ETF

The main advantage of trading using opposite LYXOR DAILY and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LYXOR DAILY 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 LYXOR DAILY SHORTDAX 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.