Correlation Between BetaShares Global and IShares UBS

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

By analyzing existing cross correlation between BetaShares Global Banks and iShares UBS Government, you can compare the effects of market volatilities on BetaShares Global and IShares UBS 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 BetaShares Global with a short position of IShares UBS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaShares Global and IShares UBS.

Diversification Opportunities for BetaShares Global and IShares UBS

-0.77

Correlation Coefficient

BetaShares Global  IShares UBS

Pay attention - limited upside

The 3 months correlation between BetaShares and IShares is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding BetaShares Global Banks and iShares UBS Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares UBS Government and BetaShares Global 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 BetaShares Global Banks are associated (or correlated) with IShares UBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares UBS Government has no effect on the direction of BetaShares Global i.e., BetaShares Global and IShares UBS go up and down completely randomly.

Pair Corralation between BetaShares Global and IShares UBS

Assuming the 90 days trading horizon BetaShares Global Banks is expected to generate 3.19 times more return on investment than IShares UBS. However, BetaShares Global is 3.19 times more volatile than iShares UBS Government. It trades about 0.17 of its potential returns per unit of risk. iShares UBS Government is currently generating about -0.02 per unit of risk. If you would invest  781.00  in BetaShares Global Banks on September 3, 2024 and sell it today you would earn a total of  85.00  from holding BetaShares Global Banks or generate 10.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BetaShares Global Banks  vs.  iShares UBS Government

BetaShares Global Banks

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BetaShares Global Banks are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BetaShares Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

iShares UBS Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares UBS Government has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, IShares UBS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BetaShares Global and IShares UBS

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

The idea behind BetaShares Global Banks and iShares UBS Government 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.