Correlation Between IShares ESG and UBS

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

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

Diversification Opportunities for IShares ESG and UBS

0.46

Correlation Coefficient

IShares ESG  UBS

Very weak diversification

The 3 months correlation between IShares and UBS is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding iShares ESG Advanced and UBS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBS and IShares ESG 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 iShares ESG Advanced are associated (or correlated) with UBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBS has no effect on the direction of IShares ESG i.e., IShares ESG and UBS go up and down completely randomly.

Pair Corralation between IShares ESG and UBS

Given the investment horizon of 90 days iShares ESG Advanced is expected to generate 2.32 times more return on investment than UBS. However, IShares ESG is 2.32 times more volatile than UBS. It trades about 0.07 of its potential returns per unit of risk. UBS is currently generating about -0.45 per unit of risk. If you would invest  4,723  in iShares ESG Advanced on September 14, 2024 and sell it today you would earn a total of  429.00  from holding iShares ESG Advanced or generate 9.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	3.97%
Values	Daily Returns

iShares ESG Advanced  vs.  UBS

iShares ESG Advanced

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares ESG Advanced are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, IShares ESG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

UBS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UBS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, UBS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares ESG and UBS

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

The idea behind iShares ESG Advanced and UBS 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.