Correlation Between UBSFund Solutions and IShares China

Can any of the company-specific risk be diversified away by investing in both UBSFund Solutions and IShares China 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 China 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 China Large, you can compare the effects of market volatilities on UBSFund Solutions and IShares China 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 China. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBSFund Solutions and IShares China.

Diversification Opportunities for UBSFund Solutions and IShares China

-0.1

Correlation Coefficient

UBSFund Solutions  IShares China

Good diversification

The 3 months correlation between UBSFund and IShares is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding UBSFund Solutions MSCI and iShares China Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares China Large 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 China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares China Large has no effect on the direction of UBSFund Solutions i.e., UBSFund Solutions and IShares China go up and down completely randomly.

Pair Corralation between UBSFund Solutions and IShares China

Assuming the 90 days trading horizon UBSFund Solutions is expected to generate 9.49 times less return on investment than IShares China. But when comparing it to its historical volatility, UBSFund Solutions MSCI is 2.24 times less risky than IShares China. It trades about 0.02 of its potential returns per unit of risk. iShares China Large is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  8,530  in iShares China Large on September 28, 2024 and sell it today you would earn a total of  290.00  from holding iShares China Large or generate 3.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

UBSFund Solutions MSCI  vs.  iShares China Large

UBSFund Solutions MSCI

Risk-Adjusted Performance

3 of 100

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 China Large

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with UBSFund Solutions and IShares China

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

The idea behind UBSFund Solutions MSCI and iShares China Large 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.