Correlation Between UBS ETF and IShares VII

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

Diversification Opportunities for UBS ETF and IShares VII

0.73

Correlation Coefficient

UBS ETF  IShares VII

Poor diversification

The 3 months correlation between UBS and IShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETF MSCI and iShares VII PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares VII PLC 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 IShares VII. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares VII PLC has no effect on the direction of UBS ETF i.e., UBS ETF and IShares VII go up and down completely randomly.

Pair Corralation between UBS ETF and IShares VII

Assuming the 90 days trading horizon UBS ETF MSCI is expected to under-perform the IShares VII. But the etf apears to be less risky and, when comparing its historical volatility, UBS ETF MSCI is 1.3 times less risky than IShares VII. The etf trades about -0.05 of its potential returns per unit of risk. The iShares VII PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  17,876  in iShares VII PLC on September 13, 2024 and sell it today you would earn a total of  494.00  from holding iShares VII PLC or generate 2.76% return on investment over 90 days.

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

UBS ETF MSCI  vs.  iShares VII PLC

UBS ETF MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS ETF MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, UBS ETF is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares VII PLC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares VII PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares VII is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with UBS ETF and IShares VII

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

The idea behind UBS ETF MSCI and iShares VII PLC 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.