Correlation Between UBS Fund and Xtrackers ShortDAX

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

Diversification Opportunities for UBS Fund and Xtrackers ShortDAX

-0.92
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between UBS and Xtrackers is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding UBS Fund Solutions and Xtrackers ShortDAX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers ShortDAX and UBS Fund 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 Fund Solutions are associated (or correlated) with Xtrackers ShortDAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers ShortDAX has no effect on the direction of UBS Fund i.e., UBS Fund and Xtrackers ShortDAX go up and down completely randomly.

Pair Corralation between UBS Fund and Xtrackers ShortDAX

Assuming the 90 days trading horizon UBS Fund Solutions is expected to under-perform the Xtrackers ShortDAX. But the etf apears to be less risky and, when comparing its historical volatility, UBS Fund Solutions is 1.82 times less risky than Xtrackers ShortDAX. The etf trades about -0.26 of its potential returns per unit of risk. The Xtrackers ShortDAX is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  92.00  in Xtrackers ShortDAX on January 20, 2024 and sell it today you would earn a total of  4.00  from holding Xtrackers ShortDAX or generate 4.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

UBS Fund Solutions  vs.  Xtrackers ShortDAX

 Performance 
       Timeline  
UBS Fund Solutions 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in UBS Fund Solutions are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, UBS Fund is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
Xtrackers ShortDAX 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Xtrackers ShortDAX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

UBS Fund and Xtrackers ShortDAX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UBS Fund and Xtrackers ShortDAX

The main advantage of trading using opposite UBS Fund and Xtrackers ShortDAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Fund position performs unexpectedly, Xtrackers ShortDAX 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 Xtrackers ShortDAX will offset losses from the drop in Xtrackers ShortDAX's long position.
The idea behind UBS Fund Solutions and Xtrackers ShortDAX 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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