Correlation Between IShares Core and ZKB Silver

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

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

Diversification Opportunities for IShares Core and ZKB Silver

-0.48

Correlation Coefficient

IShares Core  ZKB Silver

Very good diversification

The 3 months correlation between IShares and ZKB is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and ZKB Silver ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Silver ETF and IShares Core 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 Core SP are associated (or correlated) with ZKB Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Silver ETF has no effect on the direction of IShares Core i.e., IShares Core and ZKB Silver go up and down completely randomly.

Pair Corralation between IShares Core and ZKB Silver

Assuming the 90 days trading horizon iShares Core SP is expected to generate 0.38 times more return on investment than ZKB Silver. However, iShares Core SP is 2.61 times less risky than ZKB Silver. It trades about -0.04 of its potential returns per unit of risk. ZKB Silver ETF is currently generating about -0.06 per unit of risk. If you would invest  63,690  in iShares Core SP on September 29, 2024 and sell it today you would lose (370.00) from holding iShares Core SP or give up 0.58% of portfolio value over 90 days.

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

iShares Core SP  vs.  ZKB Silver ETF

iShares Core SP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Core SP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Core is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

ZKB Silver ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZKB Silver ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, ZKB Silver is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares Core and ZKB Silver

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

The idea behind iShares Core SP and ZKB Silver ETF 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.