Correlation Between UBSFund Solutions and IShares Core

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

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

Diversification Opportunities for UBSFund Solutions and IShares Core

0.91

Correlation Coefficient

UBSFund Solutions  IShares Core

Almost no diversification

The 3 months correlation between UBSFund and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding UBSFund Solutions MSCI and iShares Core EURO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core EURO and UBSFund Solutions 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 UBSFund Solutions MSCI are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core EURO has no effect on the direction of UBSFund Solutions i.e., UBSFund Solutions and IShares Core go up and down completely randomly.

Pair Corralation between UBSFund Solutions and IShares Core

Assuming the 90 days trading horizon UBSFund Solutions MSCI is expected to under-perform the IShares Core. In addition to that, UBSFund Solutions is 1.18 times more volatile than iShares Core EURO. It trades about -0.01 of its total potential returns per unit of risk. iShares Core EURO is currently generating about 0.01 per unit of volatility. If you would invest  4,952  in iShares Core EURO on February 5, 2024 and sell it today you would earn a total of  18.00  from holding iShares Core EURO or generate 0.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.56%
Values	Daily Returns

UBSFund Solutions MSCI  vs.  iShares Core EURO

UBSFund Solutions MSCI

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBSFund Solutions MSCI are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, UBSFund Solutions may actually be approaching a critical reversion point that can send shares even higher in June 2024.

iShares Core EURO

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core EURO are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, IShares Core may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with UBSFund Solutions and IShares Core

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

The idea behind UBSFund Solutions MSCI and iShares Core EURO 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.