Correlation Between UBS AG and IShares Regional
Can any of the company-specific risk be diversified away by investing in both UBS AG and IShares Regional 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 AG and IShares Regional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS AG London and iShares Regional Banks, you can compare the effects of market volatilities on UBS AG and IShares Regional 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 AG with a short position of IShares Regional. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS AG and IShares Regional.
Diversification Opportunities for UBS AG and IShares Regional
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UBS and IShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding UBS AG London and iShares Regional Banks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Regional Banks and UBS AG 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 AG London are associated (or correlated) with IShares Regional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Regional Banks has no effect on the direction of UBS AG i.e., UBS AG and IShares Regional go up and down completely randomly.
Pair Corralation between UBS AG and IShares Regional
Given the investment horizon of 90 days UBS AG is expected to generate 2.12 times less return on investment than IShares Regional. But when comparing it to its historical volatility, UBS AG London is 2.34 times less risky than IShares Regional. It trades about 0.16 of its potential returns per unit of risk. iShares Regional Banks is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,725 in iShares Regional Banks on August 25, 2024 and sell it today you would earn a total of 890.00 from holding iShares Regional Banks or generate 18.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS AG London vs. iShares Regional Banks
Performance |
| Timeline |
| UBS AG London |
| iShares Regional Banks |
UBS AG and IShares Regional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS AG and IShares Regional
The main advantage of trading using opposite UBS AG and IShares Regional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS AG position performs unexpectedly, IShares Regional 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 Regional will offset losses from the drop in IShares Regional's long position.The idea behind UBS AG London and iShares Regional Banks 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.| IShares Regional vs. UBS AG London | IShares Regional vs. UBS AG London | IShares Regional vs. ETRACS Quarterly Pay | IShares Regional vs. ETRACS 2xMonthly Pay |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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