Correlation Between IShares Core and IShares UBS

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

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

Diversification Opportunities for IShares Core and IShares UBS

-0.51

Correlation Coefficient

IShares Core  IShares UBS

Excellent diversification

The 3 months correlation between IShares and IShares is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP 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 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 SP 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 IShares Core i.e., IShares Core and IShares UBS go up and down completely randomly.

Pair Corralation between IShares Core and IShares UBS

Assuming the 90 days trading horizon iShares Core SP is expected to generate 2.35 times more return on investment than IShares UBS. However, IShares Core is 2.35 times more volatile than iShares UBS Government. It trades about 0.29 of its potential returns per unit of risk. iShares UBS Government is currently generating about -0.05 per unit of risk. If you would invest  5,544  in iShares Core SP on September 13, 2024 and sell it today you would earn a total of  780.00  from holding iShares Core SP or generate 14.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

iShares Core SP  vs.  iShares UBS Government

iShares Core SP

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, IShares Core unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 IShares Core and IShares UBS

The main advantage of trading using opposite IShares Core and IShares UBS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 iShares Core SP 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.