Correlation Between IShares Core and UBS Barclays

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

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

Diversification Opportunities for IShares Core and UBS Barclays

0.77

Correlation Coefficient

IShares Core  UBS Barclays

Poor diversification

The 3 months correlation between IShares and UBS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and UBS Barclays Liquid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS Barclays Liquid and IShares Core 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 Core SP are associated (or correlated) with UBS Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS Barclays Liquid has no effect on the direction of IShares Core i.e., IShares Core and UBS Barclays go up and down completely randomly.

Pair Corralation between IShares Core and UBS Barclays

Assuming the 90 days trading horizon iShares Core SP is expected to under-perform the UBS Barclays. In addition to that, IShares Core is 1.38 times more volatile than UBS Barclays Liquid. It trades about -0.16 of its total potential returns per unit of risk. UBS Barclays Liquid is currently generating about -0.04 per unit of volatility. If you would invest  1,387  in UBS Barclays Liquid on December 22, 2024 and sell it today you would lose (21.00) from holding UBS Barclays Liquid or give up 1.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

iShares Core SP  vs.  UBS Barclays Liquid

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

UBS Barclays Liquid

Risk-Adjusted Performance

Very Weak

Over the last 90 days UBS Barclays Liquid has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, UBS Barclays is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Core and UBS Barclays

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

The idea behind iShares Core SP and UBS Barclays Liquid 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 CEOs Directory module to screen CEOs from public companies around the world.