Correlation Between UBS Fund and Lyxor 1

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Can any of the company-specific risk be diversified away by investing in both UBS Fund and Lyxor 1 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 Lyxor 1 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 Lyxor 1 , you can compare the effects of market volatilities on UBS Fund and Lyxor 1 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 Lyxor 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Fund and Lyxor 1.

Diversification Opportunities for UBS Fund and Lyxor 1

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between UBS and Lyxor is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding UBS Fund Solutions and Lyxor 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyxor 1 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 Lyxor 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyxor 1 has no effect on the direction of UBS Fund i.e., UBS Fund and Lyxor 1 go up and down completely randomly.

Pair Corralation between UBS Fund and Lyxor 1

Assuming the 90 days trading horizon UBS Fund Solutions is expected to generate 0.98 times more return on investment than Lyxor 1. However, UBS Fund Solutions is 1.03 times less risky than Lyxor 1. It trades about -0.38 of its potential returns per unit of risk. Lyxor 1 is currently generating about -0.45 per unit of risk. If you would invest  5,283  in UBS Fund Solutions on January 22, 2024 and sell it today you would lose (305.00) from holding UBS Fund Solutions or give up 5.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

UBS Fund Solutions  vs.  Lyxor 1

 Performance 
       Timeline  
UBS Fund Solutions 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in UBS Fund Solutions are ranked lower than 3 (%) 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.
Lyxor 1 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lyxor 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Lyxor 1 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

UBS Fund and Lyxor 1 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UBS Fund and Lyxor 1

The main advantage of trading using opposite UBS Fund and Lyxor 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Fund position performs unexpectedly, Lyxor 1 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 Lyxor 1 will offset losses from the drop in Lyxor 1's long position.
The idea behind UBS Fund Solutions and Lyxor 1 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.
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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