Correlation Between WisdomTree Silver and IShares Edge

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

By analyzing existing cross correlation between WisdomTree Silver 3x and iShares Edge MSCI, you can compare the effects of market volatilities on WisdomTree Silver and IShares Edge 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 Silver with a short position of IShares Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Silver and IShares Edge.

Diversification Opportunities for WisdomTree Silver and IShares Edge

0.74

Correlation Coefficient

WisdomTree Silver  IShares Edge

Poor diversification

The 3 months correlation between WisdomTree and IShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Silver 3x and iShares Edge MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Edge MSCI and WisdomTree Silver 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 Silver 3x are associated (or correlated) with IShares Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Edge MSCI has no effect on the direction of WisdomTree Silver i.e., WisdomTree Silver and IShares Edge go up and down completely randomly.

Pair Corralation between WisdomTree Silver and IShares Edge

Assuming the 90 days trading horizon WisdomTree Silver 3x is expected to under-perform the IShares Edge. In addition to that, WisdomTree Silver is 13.44 times more volatile than iShares Edge MSCI. It trades about -0.12 of its total potential returns per unit of risk. iShares Edge MSCI is currently generating about -0.25 per unit of volatility. If you would invest  516,200  in iShares Edge MSCI on October 3, 2024 and sell it today you would lose (11,400) from holding iShares Edge MSCI or give up 2.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

WisdomTree Silver 3x  vs.  iShares Edge MSCI

WisdomTree Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WisdomTree Silver 3x has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

iShares Edge MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Edge MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, IShares Edge is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with WisdomTree Silver and IShares Edge

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

The idea behind WisdomTree Silver 3x and iShares Edge 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.