Correlation Between WisdomTree and UBSFund Solutions

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

By analyzing existing cross correlation between WisdomTree SP 500 and UBSFund Solutions Factor, you can compare the effects of market volatilities on WisdomTree and UBSFund Solutions 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 WisdomTree with a short position of UBSFund Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree and UBSFund Solutions.

Diversification Opportunities for WisdomTree and UBSFund Solutions

0.88

Correlation Coefficient

WisdomTree  UBSFund Solutions

Very poor diversification

The 3 months correlation between WisdomTree and UBSFund is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree SP 500 and UBSFund Solutions Factor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBSFund Solutions Factor and WisdomTree 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 WisdomTree SP 500 are associated (or correlated) with UBSFund Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UBSFund Solutions Factor has no effect on the direction of WisdomTree i.e., WisdomTree and UBSFund Solutions go up and down completely randomly.

Pair Corralation between WisdomTree and UBSFund Solutions

Assuming the 90 days trading horizon WisdomTree SP 500 is expected to generate 3.35 times more return on investment than UBSFund Solutions. However, WisdomTree is 3.35 times more volatile than UBSFund Solutions Factor. It trades about 0.34 of its potential returns per unit of risk. UBSFund Solutions Factor is currently generating about 0.21 per unit of risk. If you would invest  544,150  in WisdomTree SP 500 on April 22, 2025 and sell it today you would earn a total of  360,050  from holding WisdomTree SP 500 or generate 66.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

WisdomTree SP 500  vs.  UBSFund Solutions Factor

WisdomTree SP 500

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree SP 500 are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, WisdomTree unveiled solid returns over the last few months and may actually be approaching a breakup point.

UBSFund Solutions Factor

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBSFund Solutions Factor are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, UBSFund Solutions may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with WisdomTree and UBSFund Solutions

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

The idea behind WisdomTree SP 500 and UBSFund Solutions Factor 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 Transaction History module to view history of all your transactions and understand their impact on performance.