Correlation Between UBS Fund and Xtrackers MSCI

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

Diversification Opportunities for UBS Fund and Xtrackers MSCI

0.5

Correlation Coefficient

UBS Fund  Xtrackers MSCI

Very weak diversification

The 3 months correlation between UBS and Xtrackers is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding UBS Fund Solutions and Xtrackers MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI 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 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 has no effect on the direction of UBS Fund i.e., UBS Fund and Xtrackers MSCI go up and down completely randomly.

Pair Corralation between UBS Fund and Xtrackers MSCI

Assuming the 90 days trading horizon UBS Fund is expected to generate 1.71 times less return on investment than Xtrackers MSCI. In addition to that, UBS Fund is 1.26 times more volatile than Xtrackers MSCI. It trades about 0.04 of its total potential returns per unit of risk. Xtrackers MSCI is currently generating about 0.08 per unit of volatility. If you would invest  3,214  in Xtrackers MSCI on September 25, 2024 and sell it today you would earn a total of  108.00  from holding Xtrackers MSCI or generate 3.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.06%
Values	Daily Returns

UBS Fund Solutions  vs.  Xtrackers MSCI

UBS Fund Solutions

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UBS Fund Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, UBS Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Xtrackers MSCI

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers MSCI are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Xtrackers MSCI is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with UBS Fund and Xtrackers MSCI

The main advantage of trading using opposite UBS Fund and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBS Fund 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 Fund Solutions and Xtrackers MSCI 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.