Correlation Between UBSFund Solutions and IShares SP

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Can any of the company-specific risk be diversified away by investing in both UBSFund Solutions and IShares SP 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 SP 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 SP 500, you can compare the effects of market volatilities on UBSFund Solutions and IShares SP 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 SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBSFund Solutions and IShares SP.

Diversification Opportunities for UBSFund Solutions and IShares SP

0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between UBSFund and IShares is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding UBSFund Solutions MSCI and iShares SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP 500 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 SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP 500 has no effect on the direction of UBSFund Solutions i.e., UBSFund Solutions and IShares SP go up and down completely randomly.

Pair Corralation between UBSFund Solutions and IShares SP

Assuming the 90 days trading horizon UBSFund Solutions MSCI is expected to generate 1.3 times more return on investment than IShares SP. However, UBSFund Solutions is 1.3 times more volatile than iShares SP 500. It trades about 0.02 of its potential returns per unit of risk. iShares SP 500 is currently generating about -0.03 per unit of risk. If you would invest  4,784  in UBSFund Solutions MSCI on September 28, 2024 and sell it today you would earn a total of  14.00  from holding UBSFund Solutions MSCI or generate 0.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy90.48%
ValuesDaily Returns

UBSFund Solutions MSCI  vs.  iShares SP 500

 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 SP 500 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in iShares SP 500 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares SP is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

UBSFund Solutions and IShares SP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UBSFund Solutions and IShares SP

The main advantage of trading using opposite UBSFund Solutions and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBSFund Solutions position performs unexpectedly, IShares SP 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 SP will offset losses from the drop in IShares SP's long position.
The idea behind UBSFund Solutions MSCI and iShares SP 500 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.

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