Correlation Between Global X and UBS ETRACS

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

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

Diversification Opportunities for Global X and UBS ETRACS

-0.32

Correlation Coefficient

Global X  UBS ETRACS

Very good diversification

The 3 months correlation between Global and UBS is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Global X Artificial and UBS ETRACS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETRACS and Global X 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 Global X Artificial are associated (or correlated) with UBS ETRACS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETRACS has no effect on the direction of Global X i.e., Global X and UBS ETRACS go up and down completely randomly.

Pair Corralation between Global X and UBS ETRACS

Considering the 90-day investment horizon Global X Artificial is expected to generate 0.34 times more return on investment than UBS ETRACS. However, Global X Artificial is 2.97 times less risky than UBS ETRACS. It trades about 0.14 of its potential returns per unit of risk. UBS ETRACS is currently generating about -0.08 per unit of risk. If you would invest  2,769  in Global X Artificial on February 4, 2024 and sell it today you would earn a total of  545.00  from holding Global X Artificial or generate 19.68% return on investment over 90 days.

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

Global X Artificial  vs.  UBS ETRACS

Global X Artificial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Artificial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Global X is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

UBS ETRACS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS ETRACS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Etf's forward indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with Global X and UBS ETRACS

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

The idea behind Global X Artificial and UBS ETRACS 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.