Correlation Between IShares JP and UBSFund Solutions

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

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

Diversification Opportunities for IShares JP and UBSFund Solutions

0.9

Correlation Coefficient

IShares JP  UBSFund Solutions

Almost no diversification

The 3 months correlation between IShares and UBSFund is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares JP Morgan and UBSFund Solutions Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBSFund Solutions and IShares JP 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 JP Morgan are associated (or correlated) with UBSFund Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBSFund Solutions has no effect on the direction of IShares JP i.e., IShares JP and UBSFund Solutions go up and down completely randomly.

Pair Corralation between IShares JP and UBSFund Solutions

Assuming the 90 days trading horizon IShares JP is expected to generate 1.2 times less return on investment than UBSFund Solutions. But when comparing it to its historical volatility, iShares JP Morgan is 1.39 times less risky than UBSFund Solutions. It trades about 0.02 of its potential returns per unit of risk. UBSFund Solutions Bloomberg is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,296  in UBSFund Solutions Bloomberg on September 28, 2024 and sell it today you would earn a total of  97.00  from holding UBSFund Solutions Bloomberg or generate 7.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	90.47%
Values	Daily Returns

iShares JP Morgan  vs.  UBSFund Solutions Bloomberg

iShares JP Morgan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares JP Morgan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares JP is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

UBSFund Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with IShares JP and UBSFund Solutions

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

The idea behind iShares JP Morgan and UBSFund Solutions Bloomberg 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.