Correlation Between UBS Fund and WisdomTree Battery

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

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

Diversification Opportunities for UBS Fund and WisdomTree Battery

0.67

Correlation Coefficient

UBS Fund  WisdomTree Battery

Poor diversification

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

Pair Corralation between UBS Fund and WisdomTree Battery

Assuming the 90 days trading horizon UBS Fund Solutions is expected to generate 2.73 times more return on investment than WisdomTree Battery. However, UBS Fund is 2.73 times more volatile than WisdomTree Battery Metals. It trades about 0.01 of its potential returns per unit of risk. WisdomTree Battery Metals is currently generating about -0.03 per unit of risk. If you would invest  885.00  in UBS Fund Solutions on September 27, 2024 and sell it today you would earn a total of  0.00  from holding UBS Fund Solutions or generate 0.0% return on investment over 90 days.

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

UBS Fund Solutions  vs.  WisdomTree Battery Metals

UBS Fund Solutions

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Fund Solutions are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, UBS Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

WisdomTree Battery Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree Battery Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, WisdomTree Battery is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with UBS Fund and WisdomTree Battery

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

The idea behind UBS Fund Solutions and WisdomTree Battery Metals 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.