Correlation Between IShares Dividend and Silvercorp Metals

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

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

Diversification Opportunities for IShares Dividend and Silvercorp Metals

0.25

Correlation Coefficient

IShares Dividend  Silvercorp Metals

Modest diversification

The 3 months correlation between IShares and Silvercorp is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding iShares Dividend and and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals and IShares Dividend 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 Dividend and are associated (or correlated) with Silvercorp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercorp Metals has no effect on the direction of IShares Dividend i.e., IShares Dividend and Silvercorp Metals go up and down completely randomly.

Pair Corralation between IShares Dividend and Silvercorp Metals

Given the investment horizon of 90 days IShares Dividend is expected to generate 13.28 times less return on investment than Silvercorp Metals. But when comparing it to its historical volatility, iShares Dividend and is 4.09 times less risky than Silvercorp Metals. It trades about 0.05 of its potential returns per unit of risk. Silvercorp Metals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  291.00  in Silvercorp Metals on December 30, 2024 and sell it today you would earn a total of  97.00  from holding Silvercorp Metals or generate 33.33% return on investment over 90 days.

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

iShares Dividend and  vs.  Silvercorp Metals

iShares Dividend

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Dividend and are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Dividend is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Silvercorp Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Silvercorp Metals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Silvercorp Metals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Dividend and Silvercorp Metals

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

The idea behind iShares Dividend and and Silvercorp Metals 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.