Correlation Between Vanguard and UBSFund Solutions

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

By analyzing existing cross correlation between Vanguard SP 500 and UBSFund Solutions MSCI, you can compare the effects of market volatilities on Vanguard and UBSFund Solutions 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 Vanguard with a short position of UBSFund Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and UBSFund Solutions.

Diversification Opportunities for Vanguard and UBSFund Solutions

-0.84

Correlation Coefficient

Vanguard  UBSFund Solutions

Pay attention - limited upside

The 3 months correlation between Vanguard and UBSFund is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP 500 and UBSFund Solutions MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBSFund Solutions MSCI and Vanguard 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 Vanguard SP 500 are associated (or correlated) with UBSFund Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBSFund Solutions MSCI has no effect on the direction of Vanguard i.e., Vanguard and UBSFund Solutions go up and down completely randomly.

Pair Corralation between Vanguard and UBSFund Solutions

Assuming the 90 days trading horizon Vanguard SP 500 is expected to generate 0.88 times more return on investment than UBSFund Solutions. However, Vanguard SP 500 is 1.14 times less risky than UBSFund Solutions. It trades about 0.1 of its potential returns per unit of risk. UBSFund Solutions MSCI is currently generating about 0.03 per unit of risk. If you would invest  6,723  in Vanguard SP 500 on September 28, 2024 and sell it today you would earn a total of  3,465  from holding Vanguard SP 500 or generate 51.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Vanguard SP 500  vs.  UBSFund Solutions MSCI

Vanguard SP 500

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard SP 500 are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Vanguard may actually be approaching a critical reversion point that can send shares even higher in January 2025.

UBSFund Solutions MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBSFund Solutions MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with Vanguard and UBSFund Solutions

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

The idea behind Vanguard SP 500 and UBSFund Solutions MSCI 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 Transaction History module to view history of all your transactions and understand their impact on performance.