Correlation Between Vanguard FTSE and UBS Fund

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

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

Diversification Opportunities for Vanguard FTSE and UBS Fund

0.68

Correlation Coefficient

Vanguard FTSE  UBS Fund

Poor diversification

The 3 months correlation between Vanguard and UBS is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE All World and UBS Fund Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Fund Solutions and Vanguard FTSE 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 FTSE All World are associated (or correlated) with UBS Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Fund Solutions has no effect on the direction of Vanguard FTSE i.e., Vanguard FTSE and UBS Fund go up and down completely randomly.

Pair Corralation between Vanguard FTSE and UBS Fund

Assuming the 90 days trading horizon Vanguard FTSE All World is expected to generate 0.53 times more return on investment than UBS Fund. However, Vanguard FTSE All World is 1.9 times less risky than UBS Fund. It trades about 0.01 of its potential returns per unit of risk. UBS Fund Solutions is currently generating about -0.03 per unit of risk. If you would invest  13,410  in Vanguard FTSE All World on September 26, 2024 and sell it today you would earn a total of  8.00  from holding Vanguard FTSE All World or generate 0.06% return on investment over 90 days.

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

Vanguard FTSE All World  vs.  UBS Fund Solutions

Vanguard FTSE All

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard FTSE All World are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Vanguard FTSE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

UBS Fund Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS Fund Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, UBS Fund 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 FTSE and UBS Fund

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

The idea behind Vanguard FTSE All World and UBS Fund Solutions 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.