Correlation Between UBSFund Solutions and IShares MSCI

Can any of the company-specific risk be diversified away by investing in both UBSFund Solutions and IShares 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 UBSFund Solutions and IShares MSCI 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 MSCI Japan, you can compare the effects of market volatilities on UBSFund Solutions and IShares 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 UBSFund Solutions with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBSFund Solutions and IShares MSCI.

Diversification Opportunities for UBSFund Solutions and IShares MSCI

0.94

Correlation Coefficient

UBSFund Solutions  IShares MSCI

Almost no diversification

The 3 months correlation between UBSFund and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding UBSFund Solutions MSCI and iShares MSCI Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Japan 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 MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Japan has no effect on the direction of UBSFund Solutions i.e., UBSFund Solutions and IShares MSCI go up and down completely randomly.

Pair Corralation between UBSFund Solutions and IShares MSCI

Assuming the 90 days trading horizon UBSFund Solutions is expected to generate 2.93 times less return on investment than IShares MSCI. In addition to that, UBSFund Solutions is 1.19 times more volatile than iShares MSCI Japan. It trades about 0.03 of its total potential returns per unit of risk. iShares MSCI Japan is currently generating about 0.1 per unit of volatility. If you would invest  5,548  in iShares MSCI Japan on February 1, 2024 and sell it today you would earn a total of  3,158  from holding iShares MSCI Japan or generate 56.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	97.58%
Values	Daily Returns

UBSFund Solutions MSCI  vs.  iShares MSCI Japan

UBSFund Solutions MSCI

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBSFund Solutions MSCI are ranked lower than 12 (%) 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 MSCI Japan

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with UBSFund Solutions and IShares MSCI

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

The idea behind UBSFund Solutions MSCI and iShares MSCI Japan 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..