Correlation Between UBS ETRACS and First Trust
Can any of the company-specific risk be diversified away by investing in both UBS ETRACS and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS ETRACS and First Trust Mid, you can compare the effects of market volatilities on UBS ETRACS and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETRACS and First Trust.
Diversification Opportunities for UBS ETRACS and First Trust
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UBS and First is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and First Trust Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Mid 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Mid has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and First Trust go up and down completely randomly.
Pair Corralation between UBS ETRACS and First Trust
Given the investment horizon of 90 days UBS ETRACS is expected to generate 2.93 times more return on investment than First Trust. However, UBS ETRACS is 2.93 times more volatile than First Trust Mid. It trades about 0.29 of its potential returns per unit of risk. First Trust Mid is currently generating about -0.11 per unit of risk. If you would invest 1,274 in UBS ETRACS on February 7, 2024 and sell it today you would earn a total of 239.08 from holding UBS ETRACS or generate 18.77% 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. First Trust Mid
Performance |
Timeline |
UBS ETRACS |
First Trust Mid |
UBS ETRACS and First Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UBS ETRACS and First Trust
The main advantage of trading using opposite UBS ETRACS and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETRACS position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.UBS ETRACS vs. American Beacon GLG | UBS ETRACS vs. First Trust Indxx | UBS ETRACS vs. Direxion Daily Regional | UBS ETRACS vs. Drum Income Plus |
First Trust vs. iShares Equity Factor | First Trust vs. Morningstar Unconstrained Allocation | First Trust vs. Via Renewables |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |