Correlation Between UBS and IShares California

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

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

Diversification Opportunities for UBS and IShares California

0.0

Correlation Coefficient

UBS  IShares California

Pay attention - limited upside

The 3 months correlation between UBS and IShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding UBS and iShares California Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares California Muni and UBS 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 are associated (or correlated) with IShares California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares California Muni has no effect on the direction of UBS i.e., UBS and IShares California go up and down completely randomly.

Pair Corralation between UBS and IShares California

If you would invest (100.00) in UBS on December 28, 2024 and sell it today you would earn a total of  100.00  from holding UBS or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

UBS  vs.  iShares California Muni

UBS

Risk-Adjusted Performance

Very Weak

Over the last 90 days UBS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, UBS is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares California Muni

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares California Muni has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, IShares California is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with UBS and IShares California

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

The idea behind UBS and iShares California Muni 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.