Correlation Between Nestl SA and UBS Group

Can any of the company-specific risk be diversified away by investing in both Nestl SA and UBS Group 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 Nestl SA and UBS Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nestl SA and UBS Group AG, you can compare the effects of market volatilities on Nestl SA and UBS Group 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 Nestl SA with a short position of UBS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nestl SA and UBS Group.

Diversification Opportunities for Nestl SA and UBS Group

0.0

Correlation Coefficient

Nestl SA  UBS Group

Pay attention - limited upside

The 3 months correlation between Nestl and UBS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nestl SA and UBS Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Group AG and Nestl SA 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 Nestl SA are associated (or correlated) with UBS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Group AG has no effect on the direction of Nestl SA i.e., Nestl SA and UBS Group go up and down completely randomly.

Pair Corralation between Nestl SA and UBS Group

If you would invest  8,903  in Nestl SA on March 5, 2024 and sell it today you would earn a total of  653.00  from holding Nestl SA or generate 7.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Nestl SA  vs.  UBS Group AG

Nestl SA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nestl SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Nestl SA may actually be approaching a critical reversion point that can send shares even higher in July 2024.

UBS Group AG

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days UBS Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, UBS Group is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Nestl SA and UBS Group

The main advantage of trading using opposite Nestl SA and UBS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nestl SA position performs unexpectedly, UBS Group 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 Group will offset losses from the drop in UBS Group's long position.

The idea behind Nestl SA and UBS Group AG 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.