Correlation Between Ford and UBS ETRACS
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and UBS ETRACS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and UBS ETRACS , you can compare the effects of market volatilities on Ford 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 Ford with a short position of UBS ETRACS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and UBS ETRACS.
Diversification Opportunities for Ford and UBS ETRACS
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and UBS is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and UBS ETRACS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETRACS and Ford 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 Ford Motor 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 Ford i.e., Ford and UBS ETRACS go up and down completely randomly.
Pair Corralation between Ford and UBS ETRACS
Taking into account the 90-day investment horizon Ford Motor is expected to generate 0.74 times more return on investment than UBS ETRACS. However, Ford Motor is 1.35 times less risky than UBS ETRACS. It trades about 0.03 of its potential returns per unit of risk. UBS ETRACS is currently generating about -0.17 per unit of risk. If you would invest 1,210 in Ford Motor on February 17, 2024 and sell it today you would earn a total of 28.00 from holding Ford Motor or generate 2.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ford Motor vs. UBS ETRACS
Performance |
Timeline |
Ford Motor |
UBS ETRACS |
Ford and UBS ETRACS Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ford and UBS ETRACS
The main advantage of trading using opposite Ford and UBS ETRACS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor 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.UBS ETRACS vs. American Beacon GLG | UBS ETRACS vs. Direxion Daily Regional | UBS ETRACS vs. Drum Income Plus | UBS ETRACS vs. EA Series Trust |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
CEOs Directory Screen CEOs from public companies around the world | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |