Correlation Between UBS Fund and IShares Core
Can any of the company-specific risk be diversified away by investing in both UBS Fund 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 UBS Fund and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UBS Fund Solutions and iShares Core SP, you can compare the effects of market volatilities on UBS Fund 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 UBS Fund with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Fund and IShares Core.
Diversification Opportunities for UBS Fund and IShares Core
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UBS and IShares is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding UBS Fund Solutions and iShares Core SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core SP and UBS Fund 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 Fund Solutions 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 SP has no effect on the direction of UBS Fund i.e., UBS Fund and IShares Core go up and down completely randomly.
Pair Corralation between UBS Fund and IShares Core
Assuming the 90 days trading horizon UBS Fund is expected to generate 2.14 times less return on investment than IShares Core. But when comparing it to its historical volatility, UBS Fund Solutions is 1.58 times less risky than IShares Core. It trades about 0.13 of its potential returns per unit of risk. iShares Core SP is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 57,160 in iShares Core SP on August 30, 2024 and sell it today you would earn a total of 2,920 from holding iShares Core SP or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
UBS Fund Solutions vs. iShares Core SP
Performance |
| Timeline |
| UBS Fund Solutions |
| iShares Core SP |
UBS Fund and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UBS Fund and IShares Core
The main advantage of trading using opposite UBS Fund and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Fund 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 UBS Fund Solutions and iShares Core SP 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 Core vs. Xtrackers Nikkei 225 | IShares Core vs. iShares VII PLC | IShares Core vs. iShares Core MSCI |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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