Correlation Between UBS ETF and Xtrackers MSCI

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

By analyzing existing cross correlation between UBS ETF plc and Xtrackers MSCI USA, you can compare the effects of market volatilities on UBS ETF and Xtrackers MSCI 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 ETF with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS ETF and Xtrackers MSCI.

Diversification Opportunities for UBS ETF and Xtrackers MSCI

0.83

Correlation Coefficient

UBS ETF  Xtrackers MSCI

Very poor diversification

The 3 months correlation between UBS and Xtrackers is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETF plc and Xtrackers MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI USA and UBS ETF 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 ETF plc are associated (or correlated) with Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI USA has no effect on the direction of UBS ETF i.e., UBS ETF and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between UBS ETF and Xtrackers MSCI

Assuming the 90 days trading horizon UBS ETF plc is expected to under-perform the Xtrackers MSCI. In addition to that, UBS ETF is 1.12 times more volatile than Xtrackers MSCI USA. It trades about -0.01 of its total potential returns per unit of risk. Xtrackers MSCI USA is currently generating about 0.03 per unit of volatility. If you would invest  13,484  in Xtrackers MSCI USA on October 11, 2024 and sell it today you would earn a total of  142.00  from holding Xtrackers MSCI USA or generate 1.05% return on investment over 90 days.

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

UBS ETF plc  vs.  Xtrackers MSCI USA

UBS ETF plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS ETF plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, UBS ETF is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Xtrackers MSCI USA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI USA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Xtrackers MSCI 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 UBS ETF and Xtrackers MSCI

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

The idea behind UBS ETF plc and Xtrackers MSCI USA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.