Correlation Between Pace Mortgage and Ubs Pace

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

By analyzing existing cross correlation between Pace Mortgage Backed Securities and Ubs Pace Global, you can compare the effects of market volatilities on Pace Mortgage and Ubs Pace 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 Pace Mortgage with a short position of Ubs Pace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Mortgage and Ubs Pace.

Diversification Opportunities for Pace Mortgage and Ubs Pace

0.82

Correlation Coefficient

Pace Mortgage  Ubs Pace

Very poor diversification

The 3 months correlation between Pace and Ubs is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Pace Mortgage Backed Securitie and Ubs Pace Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubs Pace Global and Pace Mortgage 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 Pace Mortgage Backed Securities are associated (or correlated) with Ubs Pace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubs Pace Global has no effect on the direction of Pace Mortgage i.e., Pace Mortgage and Ubs Pace go up and down completely randomly.

Pair Corralation between Pace Mortgage and Ubs Pace

Assuming the 90 days horizon Pace Mortgage Backed Securities is expected to generate 0.27 times more return on investment than Ubs Pace. However, Pace Mortgage Backed Securities is 3.68 times less risky than Ubs Pace. It trades about -0.43 of its potential returns per unit of risk. Ubs Pace Global is currently generating about -0.44 per unit of risk. If you would invest  1,030  in Pace Mortgage Backed Securities on September 29, 2024 and sell it today you would lose (26.00) from holding Pace Mortgage Backed Securities or give up 2.52% of portfolio value over 90 days.

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

Pace Mortgage Backed Securitie  vs.  Ubs Pace Global

Pace Mortgage Backed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pace Mortgage Backed Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pace Mortgage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ubs Pace Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ubs Pace Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Pace Mortgage and Ubs Pace

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

The idea behind Pace Mortgage Backed Securities and Ubs Pace Global 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.