Correlation Between ISharesGlobal 100 and IShares UBS

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

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

Diversification Opportunities for ISharesGlobal 100 and IShares UBS

0.44

Correlation Coefficient

ISharesGlobal 100  IShares UBS

Very weak diversification

The 3 months correlation between ISharesGlobal and IShares is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding iSharesGlobal 100 and iShares UBS Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares UBS Government and ISharesGlobal 100 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 iSharesGlobal 100 are associated (or correlated) with IShares UBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares UBS Government has no effect on the direction of ISharesGlobal 100 i.e., ISharesGlobal 100 and IShares UBS go up and down completely randomly.

Pair Corralation between ISharesGlobal 100 and IShares UBS

Assuming the 90 days trading horizon iSharesGlobal 100 is expected to generate 1.74 times more return on investment than IShares UBS. However, ISharesGlobal 100 is 1.74 times more volatile than iShares UBS Government. It trades about 0.16 of its potential returns per unit of risk. iShares UBS Government is currently generating about 0.01 per unit of risk. If you would invest  9,282  in iSharesGlobal 100 on October 10, 2024 and sell it today you would earn a total of  6,971  from holding iSharesGlobal 100 or generate 75.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

iSharesGlobal 100  vs.  iShares UBS Government

iSharesGlobal 100

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iSharesGlobal 100 are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ISharesGlobal 100 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

iShares UBS Government

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with ISharesGlobal 100 and IShares UBS

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

The idea behind iSharesGlobal 100 and iShares UBS Government 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.