Correlation Between UBS ETRACS and Invesco Zacks

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Can any of the company-specific risk be diversified away by investing in both UBS ETRACS and Invesco Zacks 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 Invesco Zacks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS ETRACS and Invesco Zacks Multi Asset, you can compare the effects of market volatilities on UBS ETRACS and Invesco Zacks 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 Invesco Zacks. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETRACS and Invesco Zacks.

Diversification Opportunities for UBS ETRACS and Invesco Zacks

-0.5
  Correlation Coefficient

Very good diversification

The 3 months correlation between UBS and Invesco is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and Invesco Zacks Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Zacks Multi 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 Invesco Zacks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Zacks Multi has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and Invesco Zacks go up and down completely randomly.

Pair Corralation between UBS ETRACS and Invesco Zacks

Given the investment horizon of 90 days UBS ETRACS is expected to generate 11.83 times more return on investment than Invesco Zacks. However, UBS ETRACS is 11.83 times more volatile than Invesco Zacks Multi Asset. It trades about 0.28 of its potential returns per unit of risk. Invesco Zacks Multi Asset is currently generating about -0.03 per unit of risk. If you would invest  1,476  in UBS ETRACS on March 7, 2024 and sell it today you would earn a total of  868.50  from holding UBS ETRACS or generate 58.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

UBS ETRACS   vs.  Invesco Zacks Multi Asset

 Performance 
       Timeline  
UBS ETRACS 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in UBS ETRACS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting forward indicators, UBS ETRACS exhibited solid returns over the last few months and may actually be approaching a breakup point.
Invesco Zacks Multi 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Zacks Multi Asset are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Invesco Zacks is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

UBS ETRACS and Invesco Zacks Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UBS ETRACS and Invesco Zacks

The main advantage of trading using opposite UBS ETRACS and Invesco Zacks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETRACS position performs unexpectedly, Invesco Zacks 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 Invesco Zacks will offset losses from the drop in Invesco Zacks' long position.
The idea behind UBS ETRACS and Invesco Zacks Multi Asset 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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