Correlation Between UBS ETRACS and Nuveen ESG
Can any of the company-specific risk be diversified away by investing in both UBS ETRACS and Nuveen ESG 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 Nuveen ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS ETRACS and Nuveen ESG Aggregate, you can compare the effects of market volatilities on UBS ETRACS and Nuveen ESG 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 Nuveen ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETRACS and Nuveen ESG.
Diversification Opportunities for UBS ETRACS and Nuveen ESG
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UBS and Nuveen is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and Nuveen ESG Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen ESG Aggregate 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 Nuveen ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen ESG Aggregate has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and Nuveen ESG go up and down completely randomly.
Pair Corralation between UBS ETRACS and Nuveen ESG
Given the investment horizon of 90 days UBS ETRACS is expected to generate 7.39 times more return on investment than Nuveen ESG. However, UBS ETRACS is 7.39 times more volatile than Nuveen ESG Aggregate. It trades about 0.11 of its potential returns per unit of risk. Nuveen ESG Aggregate is currently generating about 0.09 per unit of risk. If you would invest 1,722 in UBS ETRACS on January 25, 2024 and sell it today you would earn a total of 746.00 from holding UBS ETRACS or generate 43.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS ETRACS vs. Nuveen ESG Aggregate
Performance |
| Timeline |
| UBS ETRACS |
| Nuveen ESG Aggregate |
UBS ETRACS and Nuveen ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS ETRACS and Nuveen ESG
The main advantage of trading using opposite UBS ETRACS and Nuveen ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETRACS position performs unexpectedly, Nuveen ESG 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 Nuveen ESG will offset losses from the drop in Nuveen ESG's long position.The idea behind UBS ETRACS and Nuveen ESG Aggregate 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.| Nuveen ESG vs. Vanguard Total International | Nuveen ESG vs. Vanguard Total International | Nuveen ESG vs. Vanguard Total Stock | Nuveen ESG vs. Vanguard Real Estate |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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