Correlation Between UBS ETF and UBS 100

Can any of the company-specific risk be diversified away by investing in both UBS ETF and UBS 100 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 ETF and UBS 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UBS ETF MSCI and UBS 100 Index Fund, you can compare the effects of market volatilities on UBS ETF and UBS 100 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 ETF with a short position of UBS 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETF and UBS 100.

Diversification Opportunities for UBS ETF and UBS 100

0.94

Correlation Coefficient

UBS ETF  UBS 100

Almost no diversification

The 3 months correlation between UBS and UBS is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETF MSCI and UBS 100 Index Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS 100 Index and UBS ETF 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 ETF MSCI are associated (or correlated) with UBS 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS 100 Index has no effect on the direction of UBS ETF i.e., UBS ETF and UBS 100 go up and down completely randomly.

Pair Corralation between UBS ETF and UBS 100

Assuming the 90 days trading horizon UBS ETF is expected to generate 1.55 times less return on investment than UBS 100. But when comparing it to its historical volatility, UBS ETF MSCI is 1.04 times less risky than UBS 100. It trades about 0.21 of its potential returns per unit of risk. UBS 100 Index Fund is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  13,899  in UBS 100 Index Fund on December 23, 2024 and sell it today you would earn a total of  1,763  from holding UBS 100 Index Fund or generate 12.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.67%
Values	Daily Returns

UBS ETF MSCI  vs.  UBS 100 Index Fund

UBS ETF MSCI

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBS ETF MSCI are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, UBS ETF may actually be approaching a critical reversion point that can send shares even higher in April 2025.

UBS 100 Index

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBS 100 Index Fund are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating basic indicators, UBS 100 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UBS ETF and UBS 100

The main advantage of trading using opposite UBS ETF and UBS 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS ETF position performs unexpectedly, UBS 100 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 100 will offset losses from the drop in UBS 100's long position.

The idea behind UBS ETF MSCI and UBS 100 Index Fund 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.