Correlation Between IShares UBS and ISharesGlobal 100

Can any of the company-specific risk be diversified away by investing in both IShares UBS and ISharesGlobal 100 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 UBS and ISharesGlobal 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares UBS Government and iSharesGlobal 100, you can compare the effects of market volatilities on IShares UBS and ISharesGlobal 100 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 UBS with a short position of ISharesGlobal 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares UBS and ISharesGlobal 100.

Diversification Opportunities for IShares UBS and ISharesGlobal 100

0.25

Correlation Coefficient

IShares UBS  ISharesGlobal 100

Modest diversification

The 3 months correlation between IShares and ISharesGlobal is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding iShares UBS Government and iSharesGlobal 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iSharesGlobal 100 and IShares 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 iShares UBS Government are associated (or correlated) with ISharesGlobal 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iSharesGlobal 100 has no effect on the direction of IShares UBS i.e., IShares UBS and ISharesGlobal 100 go up and down completely randomly.

Pair Corralation between IShares UBS and ISharesGlobal 100

Assuming the 90 days trading horizon iShares UBS Government is expected to generate 0.51 times more return on investment than ISharesGlobal 100. However, iShares UBS Government is 1.95 times less risky than ISharesGlobal 100. It trades about -0.02 of its potential returns per unit of risk. iSharesGlobal 100 is currently generating about -0.11 per unit of risk. If you would invest  12,410  in iShares UBS Government on December 27, 2024 and sell it today you would lose (60.00) from holding iShares UBS Government or give up 0.48% of portfolio value over 90 days.

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

iShares UBS Government  vs.  iSharesGlobal 100

iShares UBS Government

Risk-Adjusted Performance

Very Weak

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

iSharesGlobal 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days iSharesGlobal 100 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ISharesGlobal 100 is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares UBS and ISharesGlobal 100

The main advantage of trading using opposite IShares UBS and ISharesGlobal 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares UBS position performs unexpectedly, ISharesGlobal 100 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 ISharesGlobal 100 will offset losses from the drop in ISharesGlobal 100's long position.

The idea behind iShares UBS Government and iSharesGlobal 100 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.