Correlation Between SP 500 and UBS ETF

Can any of the company-specific risk be diversified away by investing in both SP 500 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 SP 500 and UBS ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SP 500 VIX and UBS ETF , you can compare the effects of market volatilities on SP 500 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 SP 500 with a short position of UBS ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP 500 and UBS ETF.

Diversification Opportunities for SP 500 and UBS ETF

-0.01

Correlation Coefficient

SP 500  UBS ETF

Good diversification

The 3 months correlation between VILX and UBS is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding SP 500 VIX and UBS ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF and SP 500 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 SP 500 VIX 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 has no effect on the direction of SP 500 i.e., SP 500 and UBS ETF go up and down completely randomly.

Pair Corralation between SP 500 and UBS ETF

Assuming the 90 days trading horizon SP 500 VIX is expected to under-perform the UBS ETF. In addition to that, SP 500 is 2.73 times more volatile than UBS ETF . It trades about -0.06 of its total potential returns per unit of risk. UBS ETF is currently generating about 0.03 per unit of volatility. If you would invest  46,030  in UBS ETF on September 12, 2024 and sell it today you would earn a total of  513.00  from holding UBS ETF or generate 1.11% return on investment over 90 days.

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

SP 500 VIX  vs.  UBS ETF

SP 500 VIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SP 500 VIX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

UBS ETF

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBS ETF are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, UBS ETF unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SP 500 and UBS ETF

The main advantage of trading using opposite SP 500 and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP 500 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 SP 500 VIX and UBS ETF 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.