Correlation Between UBSFund Solutions and IShares NASDAQ

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Can any of the company-specific risk be diversified away by investing in both UBSFund Solutions and IShares NASDAQ 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 UBSFund Solutions and IShares NASDAQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBSFund Solutions MSCI and iShares NASDAQ 100, you can compare the effects of market volatilities on UBSFund Solutions and IShares NASDAQ 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 UBSFund Solutions with a short position of IShares NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBSFund Solutions and IShares NASDAQ.

Diversification Opportunities for UBSFund Solutions and IShares NASDAQ

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between UBSFund and IShares is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding UBSFund Solutions MSCI and iShares NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares NASDAQ 100 and UBSFund Solutions 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 UBSFund Solutions MSCI are associated (or correlated) with IShares NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares NASDAQ 100 has no effect on the direction of UBSFund Solutions i.e., UBSFund Solutions and IShares NASDAQ go up and down completely randomly.

Pair Corralation between UBSFund Solutions and IShares NASDAQ

Assuming the 90 days trading horizon UBSFund Solutions is expected to generate 2.75 times less return on investment than IShares NASDAQ. In addition to that, UBSFund Solutions is 1.1 times more volatile than iShares NASDAQ 100. It trades about 0.04 of its total potential returns per unit of risk. iShares NASDAQ 100 is currently generating about 0.13 per unit of volatility. If you would invest  64,030  in iShares NASDAQ 100 on September 28, 2024 and sell it today you would earn a total of  58,530  from holding iShares NASDAQ 100 or generate 91.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy97.18%
ValuesDaily Returns

UBSFund Solutions MSCI  vs.  iShares NASDAQ 100

 Performance 
       Timeline  
UBSFund Solutions MSCI 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in UBSFund Solutions MSCI are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, UBSFund Solutions is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
iShares NASDAQ 100 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in iShares NASDAQ 100 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, IShares NASDAQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

UBSFund Solutions and IShares NASDAQ Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UBSFund Solutions and IShares NASDAQ

The main advantage of trading using opposite UBSFund Solutions and IShares NASDAQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBSFund Solutions position performs unexpectedly, IShares NASDAQ 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 NASDAQ will offset losses from the drop in IShares NASDAQ's long position.
The idea behind UBSFund Solutions MSCI and iShares NASDAQ 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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