Correlation Between IShares Global and UBS AG

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

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

Diversification Opportunities for IShares Global and UBS AG

0.85

Correlation Coefficient

IShares Global  UBS AG

Very poor diversification

The 3 months correlation between IShares and UBS is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding iShares Global Consumer and UBS AG London in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS AG London and IShares Global 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 Global Consumer are associated (or correlated) with UBS AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS AG London has no effect on the direction of IShares Global i.e., IShares Global and UBS AG go up and down completely randomly.

Pair Corralation between IShares Global and UBS AG

If you would invest  18,474  in iShares Global Consumer on October 1, 2024 and sell it today you would earn a total of  316.00  from holding iShares Global Consumer or generate 1.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	4.76%
Values	Daily Returns

iShares Global Consumer  vs.  UBS AG London

iShares Global Consumer

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Consumer are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, IShares Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

UBS AG London

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS AG London has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, UBS AG is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IShares Global and UBS AG

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

The idea behind iShares Global Consumer and UBS AG London 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.