Correlation Between IShares GSCI and UBS AG

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

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

Diversification Opportunities for IShares GSCI and UBS AG

0.37

Correlation Coefficient

IShares GSCI  UBS AG

Weak diversification

The 3 months correlation between IShares and UBS is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding iShares GSCI Commodity and UBS AG London in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS AG London and IShares GSCI 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 iShares GSCI Commodity are associated (or correlated) with UBS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS AG London has no effect on the direction of IShares GSCI i.e., IShares GSCI and UBS AG go up and down completely randomly.

Pair Corralation between IShares GSCI and UBS AG

Given the investment horizon of 90 days IShares GSCI is expected to generate 1.54 times less return on investment than UBS AG. But when comparing it to its historical volatility, iShares GSCI Commodity is 2.95 times less risky than UBS AG. It trades about 0.1 of its potential returns per unit of risk. UBS AG London is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,553  in UBS AG London on December 28, 2024 and sell it today you would earn a total of  138.00  from holding UBS AG London or generate 5.41% return on investment over 90 days.

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

iShares GSCI Commodity  vs.  UBS AG London

iShares GSCI Commodity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares GSCI Commodity are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, IShares GSCI is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

UBS AG London

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UBS AG London are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, UBS AG may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with IShares GSCI and UBS AG

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

The idea behind iShares GSCI Commodity and UBS AG London 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.