Correlation Between UBS ETRACS and Invesco DB
Can any of the company-specific risk be diversified away by investing in both UBS ETRACS and Invesco DB 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 DB 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 DB Oil, you can compare the effects of market volatilities on UBS ETRACS and Invesco DB 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 DB. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETRACS and Invesco DB.
Diversification Opportunities for UBS ETRACS and Invesco DB
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between UBS and Invesco is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETRACS and Invesco DB Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco DB Oil 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 DB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco DB Oil has no effect on the direction of UBS ETRACS i.e., UBS ETRACS and Invesco DB go up and down completely randomly.
Pair Corralation between UBS ETRACS and Invesco DB
Given the investment horizon of 90 days UBS ETRACS is expected to under-perform the Invesco DB. In addition to that, UBS ETRACS is 3.08 times more volatile than Invesco DB Oil. It trades about -0.03 of its total potential returns per unit of risk. Invesco DB Oil is currently generating about -0.01 per unit of volatility. If you would invest 1,476 in Invesco DB Oil on March 7, 2024 and sell it today you would lose (16.00) from holding Invesco DB Oil or give up 1.08% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
UBS ETRACS vs. Invesco DB Oil
Performance |
Timeline |
UBS ETRACS |
Invesco DB Oil |
UBS ETRACS and Invesco DB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UBS ETRACS and Invesco DB
The main advantage of trading using opposite UBS ETRACS and Invesco DB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETRACS position performs unexpectedly, Invesco DB 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 DB will offset losses from the drop in Invesco DB's long position.UBS ETRACS vs. First Trust Exchange Traded | UBS ETRACS vs. Ultimus Managers Trust | UBS ETRACS vs. Horizon Kinetics Medical | UBS ETRACS vs. Harbor Health Care |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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