Correlation Between IShares Core and UBS ETF

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

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

Diversification Opportunities for IShares Core and UBS ETF

-0.07

Correlation Coefficient

IShares Core  UBS ETF

Good diversification

The 3 months correlation between IShares and UBS is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and UBS ETF MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS ETF MSCI and IShares Core 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 Core SP are associated (or correlated) with UBS ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS ETF MSCI has no effect on the direction of IShares Core i.e., IShares Core and UBS ETF go up and down completely randomly.

Pair Corralation between IShares Core and UBS ETF

Assuming the 90 days trading horizon iShares Core SP is expected to under-perform the UBS ETF. In addition to that, IShares Core is 1.54 times more volatile than UBS ETF MSCI. It trades about -0.05 of its total potential returns per unit of risk. UBS ETF MSCI is currently generating about 0.16 per unit of volatility. If you would invest  1,970  in UBS ETF MSCI on December 28, 2024 and sell it today you would earn a total of  125.00  from holding UBS ETF MSCI or generate 6.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

iShares Core SP  vs.  UBS ETF MSCI

iShares Core SP

Risk-Adjusted Performance

Very Weak

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

UBS ETF MSCI

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBS ETF MSCI are ranked lower than 12 (%) 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.

Pair Trading with IShares Core and UBS ETF

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

The idea behind iShares Core SP and UBS ETF MSCI 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 Stocks Directory module to find actively traded stocks across global markets.