Correlation Between Caledonia Mining and IShares Physical

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

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

Diversification Opportunities for Caledonia Mining and IShares Physical

0.74

Correlation Coefficient

Caledonia Mining  IShares Physical

Poor diversification

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

Pair Corralation between Caledonia Mining and IShares Physical

Assuming the 90 days trading horizon Caledonia Mining is expected to under-perform the IShares Physical. In addition to that, Caledonia Mining is 1.08 times more volatile than iShares Physical Silver. It trades about -0.24 of its total potential returns per unit of risk. iShares Physical Silver is currently generating about -0.09 per unit of volatility. If you would invest  2,906  in iShares Physical Silver on October 1, 2024 and sell it today you would lose (91.00) from holding iShares Physical Silver or give up 3.13% of portfolio value over 90 days.

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

Caledonia Mining  vs.  iShares Physical Silver

Caledonia Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caledonia Mining 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 Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

iShares Physical Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Physical Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Physical is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Caledonia Mining and IShares Physical

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

The idea behind Caledonia Mining and iShares Physical Silver 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.