Correlation Between UBSETF GOLD and UBSFund Solutions

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

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

Diversification Opportunities for UBSETF GOLD and UBSFund Solutions

0.59

Correlation Coefficient

UBSETF GOLD  UBSFund Solutions

Very weak diversification

The 3 months correlation between UBSETF and UBSFund is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding UBSETF GOLD USD and UBSFund Solutions MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UBSFund Solutions MSCI and UBSETF GOLD 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 UBSETF GOLD USD 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 MSCI has no effect on the direction of UBSETF GOLD i.e., UBSETF GOLD and UBSFund Solutions go up and down completely randomly.

Pair Corralation between UBSETF GOLD and UBSFund Solutions

Assuming the 90 days trading horizon UBSETF GOLD USD is expected to generate 1.03 times more return on investment than UBSFund Solutions. However, UBSETF GOLD is 1.03 times more volatile than UBSFund Solutions MSCI. It trades about 0.0 of its potential returns per unit of risk. UBSFund Solutions MSCI is currently generating about -0.1 per unit of risk. If you would invest  7,378  in UBSETF GOLD USD on February 4, 2024 and sell it today you would lose (13.00) from holding UBSETF GOLD USD or give up 0.18% of portfolio value over 90 days.

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

UBSETF GOLD USD  vs.  UBSFund Solutions MSCI

UBSETF GOLD USD

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in UBSETF GOLD USD are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal forward indicators, UBSETF GOLD unveiled solid returns over the last few months and may actually be approaching a breakup point.

UBSFund Solutions MSCI

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UBSFund Solutions MSCI are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, UBSFund Solutions may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with UBSETF GOLD and UBSFund Solutions

The main advantage of trading using opposite UBSETF GOLD and UBSFund Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UBSETF GOLD 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 UBSETF GOLD USD and UBSFund Solutions 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.