Correlation Between UBS ETRACS and Vanguard

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

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

Diversification Opportunities for UBS ETRACS and Vanguard

-0.74

Correlation Coefficient

UBS ETRACS  Vanguard

Pay attention - limited upside

The 3 months correlation between UBS and Vanguard is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and Vanguard SP Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard SP Small and UBS ETRACS 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 UBS ETRACS are associated (or correlated) with Vanguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard SP Small has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and Vanguard go up and down completely randomly.

Pair Corralation between UBS ETRACS and Vanguard

Given the investment horizon of 90 days UBS ETRACS is expected to under-perform the Vanguard. In addition to that, UBS ETRACS is 4.1 times more volatile than Vanguard SP Small Cap. It trades about -0.07 of its total potential returns per unit of risk. Vanguard SP Small Cap is currently generating about 0.12 per unit of volatility. If you would invest  9,397  in Vanguard SP Small Cap on May 7, 2025 and sell it today you would earn a total of  814.00  from holding Vanguard SP Small Cap or generate 8.66% return on investment over 90 days.

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

UBS ETRACS   vs.  Vanguard SP Small Cap

UBS ETRACS

Risk-Adjusted Performance

Weakest

Over the last 90 days UBS ETRACS 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 forward indicators remain rather sound which may send shares a bit higher in September 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Vanguard SP Small

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard SP Small Cap are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vanguard may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with UBS ETRACS and Vanguard

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

The idea behind UBS ETRACS and Vanguard SP Small Cap 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..