Correlation Between UBS Fund and IShares Global

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

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

Diversification Opportunities for UBS Fund and IShares Global

0.22

Correlation Coefficient

UBS Fund  IShares Global

Modest diversification

The 3 months correlation between UBS and IShares is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding UBS Fund Solutions and iShares Global AAA AA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global AAA and UBS Fund 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 UBS Fund Solutions are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global AAA has no effect on the direction of UBS Fund i.e., UBS Fund and IShares Global go up and down completely randomly.

Pair Corralation between UBS Fund and IShares Global

Assuming the 90 days trading horizon UBS Fund Solutions is expected to generate 4.04 times more return on investment than IShares Global. However, UBS Fund is 4.04 times more volatile than iShares Global AAA AA. It trades about 0.03 of its potential returns per unit of risk. iShares Global AAA AA is currently generating about 0.11 per unit of risk. If you would invest  5,112  in UBS Fund Solutions on September 3, 2024 and sell it today you would earn a total of  99.00  from holding UBS Fund Solutions or generate 1.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

UBS Fund Solutions  vs.  iShares Global AAA AA

UBS Fund Solutions

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Fund Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, UBS Fund is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

iShares Global AAA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global AAA AA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, IShares Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with UBS Fund and IShares Global

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

The idea behind UBS Fund Solutions and iShares Global AAA AA 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.