Correlation Between UBSFund Solutions and Xtrackers MSCI

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

Diversification Opportunities for UBSFund Solutions and Xtrackers MSCI

0.31

Correlation Coefficient

UBSFund Solutions  Xtrackers MSCI

Weak diversification

The 3 months correlation between UBSFund and Xtrackers is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding UBSFund Solutions MSCI and Xtrackers MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI China 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 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 China has no effect on the direction of UBSFund Solutions i.e., UBSFund Solutions and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between UBSFund Solutions and Xtrackers MSCI

Assuming the 90 days trading horizon UBSFund Solutions is expected to generate 5.56 times less return on investment than Xtrackers MSCI. But when comparing it to its historical volatility, UBSFund Solutions MSCI is 3.05 times less risky than Xtrackers MSCI. It trades about 0.08 of its potential returns per unit of risk. Xtrackers MSCI China is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,087  in Xtrackers MSCI China on September 15, 2024 and sell it today you would earn a total of  311.00  from holding Xtrackers MSCI China or generate 28.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

UBSFund Solutions MSCI  vs.  Xtrackers MSCI China

UBSFund Solutions MSCI

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UBSFund Solutions MSCI are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, UBSFund Solutions is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Xtrackers MSCI China

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI China are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Xtrackers MSCI showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UBSFund Solutions and Xtrackers MSCI

The main advantage of trading using opposite UBSFund Solutions and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBSFund Solutions 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 UBSFund Solutions MSCI and Xtrackers MSCI China 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.