Correlation Between Vanguard Funds and UBS ETF

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

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

Diversification Opportunities for Vanguard Funds and UBS ETF

0.94

Correlation Coefficient

Vanguard Funds  UBS ETF

Almost no diversification

The 3 months correlation between Vanguard and UBS is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Funds Public 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 Vanguard Funds 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 Vanguard Funds Public 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 Vanguard Funds i.e., Vanguard Funds and UBS ETF go up and down completely randomly.

Pair Corralation between Vanguard Funds and UBS ETF

Assuming the 90 days trading horizon Vanguard Funds Public is expected to generate 5.99 times more return on investment than UBS ETF. However, Vanguard Funds is 5.99 times more volatile than UBS ETF Public. It trades about 0.24 of its potential returns per unit of risk. UBS ETF Public is currently generating about 0.23 per unit of risk. If you would invest  9,622  in Vanguard Funds Public on September 13, 2024 and sell it today you would earn a total of  1,304  from holding Vanguard Funds Public or generate 13.55% return on investment over 90 days.

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

Vanguard Funds Public  vs.  UBS ETF Public

Vanguard Funds Public

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Funds Public are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Vanguard Funds reported solid returns over the last few months and may actually be approaching a breakup point.

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 Vanguard Funds and UBS ETF

The main advantage of trading using opposite Vanguard Funds and UBS ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Funds 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 Vanguard Funds Public 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.