Correlation Between ETRACS Monthly and UBS AG

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

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

Diversification Opportunities for ETRACS Monthly and UBS AG

0.56

Correlation Coefficient

ETRACS Monthly  UBS AG

Very weak diversification

The 3 months correlation between ETRACS and UBS is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Monthly Pay and UBS AG London in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS AG London and ETRACS Monthly 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 ETRACS Monthly Pay are associated (or correlated) with UBS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS AG London has no effect on the direction of ETRACS Monthly i.e., ETRACS Monthly and UBS AG go up and down completely randomly.

Pair Corralation between ETRACS Monthly and UBS AG

Given the investment horizon of 90 days ETRACS Monthly Pay is expected to generate 1.87 times more return on investment than UBS AG. However, ETRACS Monthly is 1.87 times more volatile than UBS AG London. It trades about 0.07 of its potential returns per unit of risk. UBS AG London is currently generating about 0.13 per unit of risk. If you would invest  1,450  in ETRACS Monthly Pay on May 5, 2025 and sell it today you would earn a total of  107.00  from holding ETRACS Monthly Pay or generate 7.38% return on investment over 90 days.

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

ETRACS Monthly Pay  vs.  UBS AG London

ETRACS Monthly Pay

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ETRACS Monthly Pay are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, ETRACS Monthly may actually be approaching a critical reversion point that can send shares even higher in September 2025.

UBS AG London

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UBS AG London are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UBS AG may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with ETRACS Monthly and UBS AG

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

The idea behind ETRACS Monthly Pay and UBS AG London 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.