Correlation Between UBSFund Solutions and Vanguard EUR

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

Diversification Opportunities for UBSFund Solutions and Vanguard EUR

0.62

Correlation Coefficient

UBSFund Solutions  Vanguard EUR

Poor diversification

The 3 months correlation between UBSFund and Vanguard is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding UBSFund Solutions MSCI and Vanguard EUR Eurozone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard EUR Eurozone 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 Vanguard EUR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard EUR Eurozone has no effect on the direction of UBSFund Solutions i.e., UBSFund Solutions and Vanguard EUR go up and down completely randomly.

Pair Corralation between UBSFund Solutions and Vanguard EUR

Assuming the 90 days trading horizon UBSFund Solutions MSCI is expected to generate 2.43 times more return on investment than Vanguard EUR. However, UBSFund Solutions is 2.43 times more volatile than Vanguard EUR Eurozone. It trades about -0.03 of its potential returns per unit of risk. Vanguard EUR Eurozone is currently generating about -0.17 per unit of risk. If you would invest  4,958  in UBSFund Solutions MSCI on October 7, 2024 and sell it today you would lose (32.00) from holding UBSFund Solutions MSCI or give up 0.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.75%
Values	Daily Returns

UBSFund Solutions MSCI  vs.  Vanguard EUR Eurozone

UBSFund Solutions MSCI

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UBSFund Solutions MSCI are ranked lower than 2 (%) 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 newest stock price disturbance, may contribute to short-term losses for the investors.

Vanguard EUR Eurozone

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard EUR Eurozone has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Vanguard EUR 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 Vanguard EUR

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

The idea behind UBSFund Solutions MSCI and Vanguard EUR Eurozone 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.