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 MSCI and Xtrackers MSCI World, 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
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UBS and Xtrackers is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding UBS ETF MSCI and Xtrackers MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI World 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 MSCI 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 World 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 is expected to generate 1.95 times less return on investment than Xtrackers MSCI. But when comparing it to its historical volatility, UBS ETF MSCI is 1.35 times less risky than Xtrackers MSCI. It trades about 0.06 of its potential returns per unit of risk. Xtrackers MSCI World is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,254 in Xtrackers MSCI World on September 13, 2024 and sell it today you would earn a total of 2,886 from holding Xtrackers MSCI World or generate 46.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UBS ETF MSCI vs. Xtrackers MSCI World
Performance |
| Timeline |
| UBS ETF MSCI |
| Xtrackers MSCI World |
UBS ETF and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
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 MSCI and Xtrackers MSCI World 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.| Xtrackers MSCI vs. Baloise Holding AG | Xtrackers MSCI vs. 21Shares Polkadot ETP | Xtrackers MSCI vs. UBS ETF MSCI | Xtrackers MSCI vs. BB Biotech AG |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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