Correlation Between IShares Core and UBS Fund

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

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

Diversification Opportunities for IShares Core and UBS Fund

0.28

Correlation Coefficient

IShares Core  UBS Fund

Modest diversification

The 3 months correlation between IShares and UBS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and UBS Fund Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Fund Solutions 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 MSCI are associated (or correlated) with UBS Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Fund Solutions has no effect on the direction of IShares Core i.e., IShares Core and UBS Fund go up and down completely randomly.

Pair Corralation between IShares Core and UBS Fund

Assuming the 90 days trading horizon IShares Core is expected to generate 1.74 times less return on investment than UBS Fund. But when comparing it to its historical volatility, iShares Core MSCI is 1.1 times less risky than UBS Fund. It trades about 0.02 of its potential returns per unit of risk. UBS Fund Solutions is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,063  in UBS Fund Solutions on September 24, 2024 and sell it today you would earn a total of  86.00  from holding UBS Fund Solutions or generate 1.7% return on investment over 90 days.

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

iShares Core MSCI  vs.  UBS Fund Solutions

iShares Core MSCI

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core MSCI are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, IShares Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

UBS Fund Solutions

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Fund Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, UBS Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares Core and UBS Fund

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

The idea behind iShares Core MSCI and UBS Fund Solutions 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..