Correlation Between ETRACS Monthly and UBS ETRACS

Can any of the company-specific risk be diversified away by investing in both ETRACS Monthly 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 ETRACS Monthly and UBS ETRACS 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 ETRACS , you can compare the effects of market volatilities on ETRACS Monthly 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 ETRACS Monthly with a short position of UBS ETRACS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Monthly and UBS ETRACS.

Diversification Opportunities for ETRACS Monthly and UBS ETRACS

-0.14

Correlation Coefficient

ETRACS Monthly  UBS ETRACS

Good diversification

The 3 months correlation between ETRACS and UBS is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Monthly Pay and UBS ETRACS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETRACS 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 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 ETRACS Monthly i.e., ETRACS Monthly and UBS ETRACS go up and down completely randomly.

Pair Corralation between ETRACS Monthly and UBS ETRACS

Given the investment horizon of 90 days ETRACS Monthly Pay is expected to under-perform the UBS ETRACS. But the etf apears to be less risky and, when comparing its historical volatility, ETRACS Monthly Pay is 2.78 times less risky than UBS ETRACS. The etf trades about -0.14 of its potential returns per unit of risk. The UBS ETRACS is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,334  in UBS ETRACS on February 2, 2024 and sell it today you would earn a total of  124.00  from holding UBS ETRACS or generate 9.3% return on investment over 90 days.

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

ETRACS Monthly Pay  vs.  UBS ETRACS

ETRACS Monthly Pay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ETRACS Monthly Pay has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ETRACS Monthly is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

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 ETRACS Monthly and UBS ETRACS

The main advantage of trading using opposite ETRACS Monthly and UBS ETRACS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS Monthly 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 ETRACS Monthly Pay 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..