Correlation Between UBS Group and IShares Trust

Can any of the company-specific risk be diversified away by investing in both UBS Group and IShares Trust 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 Group and IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UBS Group AG and iShares Trust , you can compare the effects of market volatilities on UBS Group and IShares Trust 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 Group with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of UBS Group and IShares Trust.

Diversification Opportunities for UBS Group and IShares Trust

-0.63

Correlation Coefficient

UBS Group  IShares Trust

Excellent diversification

The 3 months correlation between UBS and IShares is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding UBS Group AG and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and UBS Group 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 Group AG are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of UBS Group i.e., UBS Group and IShares Trust go up and down completely randomly.

Pair Corralation between UBS Group and IShares Trust

Assuming the 90 days trading horizon UBS Group AG is expected to generate 0.67 times more return on investment than IShares Trust. However, UBS Group AG is 1.5 times less risky than IShares Trust. It trades about 0.2 of its potential returns per unit of risk. iShares Trust is currently generating about -0.07 per unit of risk. If you would invest  57,671  in UBS Group AG on September 3, 2024 and sell it today you would earn a total of  7,578  from holding UBS Group AG or generate 13.14% return on investment over 90 days.

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

UBS Group AG  vs.  iShares Trust

UBS Group AG

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Group AG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, UBS Group showed solid returns over the last few months and may actually be approaching a breakup point.

iShares Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Pair Trading with UBS Group and IShares Trust

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

The idea behind UBS Group AG and iShares Trust 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.