Correlation Between UBS Fund and Xtrackers Stoxx

Can any of the company-specific risk be diversified away by investing in both UBS Fund and Xtrackers Stoxx 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 Xtrackers Stoxx 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 Xtrackers Stoxx, you can compare the effects of market volatilities on UBS Fund and Xtrackers Stoxx 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 Xtrackers Stoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Fund and Xtrackers Stoxx.

Diversification Opportunities for UBS Fund and Xtrackers Stoxx

-0.3

Correlation Coefficient

UBS Fund  Xtrackers Stoxx

Very good diversification

The 3 months correlation between UBS and Xtrackers is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding UBS Fund Solutions and Xtrackers Stoxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Stoxx 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 Xtrackers Stoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Stoxx has no effect on the direction of UBS Fund i.e., UBS Fund and Xtrackers Stoxx go up and down completely randomly.

Pair Corralation between UBS Fund and Xtrackers Stoxx

Assuming the 90 days trading horizon UBS Fund Solutions is expected to generate 1.35 times more return on investment than Xtrackers Stoxx. However, UBS Fund is 1.35 times more volatile than Xtrackers Stoxx. It trades about 0.39 of its potential returns per unit of risk. Xtrackers Stoxx is currently generating about -0.08 per unit of risk. If you would invest  4,967  in UBS Fund Solutions on September 5, 2024 and sell it today you would earn a total of  427.00  from holding UBS Fund Solutions or generate 8.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.3%
Values	Daily Returns

UBS Fund Solutions  vs.  Xtrackers Stoxx

UBS Fund Solutions

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Fund Solutions are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady primary indicators, UBS Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Xtrackers Stoxx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers Stoxx has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Xtrackers Stoxx is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with UBS Fund and Xtrackers Stoxx

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

The idea behind UBS Fund Solutions and Xtrackers Stoxx 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.