Correlation Between ETFS Metal and ETFS Commodity

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

By analyzing existing cross correlation between ETFS Metal Securities and ETFS Commodity Securities, you can compare the effects of market volatilities on ETFS Metal and ETFS Commodity 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 ETFS Metal with a short position of ETFS Commodity. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Metal and ETFS Commodity.

Diversification Opportunities for ETFS Metal and ETFS Commodity

0.0

Correlation Coefficient

ETFS Metal  ETFS Commodity

Pay attention - limited upside

The 3 months correlation between ETFS and ETFS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Metal Securities and ETFS Commodity Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Commodity Securities and ETFS Metal 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 ETFS Metal Securities are associated (or correlated) with ETFS Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Commodity Securities has no effect on the direction of ETFS Metal i.e., ETFS Metal and ETFS Commodity go up and down completely randomly.

Pair Corralation between ETFS Metal and ETFS Commodity

If you would invest  24,900  in ETFS Metal Securities on December 26, 2024 and sell it today you would earn a total of  2,344  from holding ETFS Metal Securities or generate 9.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ETFS Metal Securities  vs.  ETFS Commodity Securities

ETFS Metal Securities

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ETFS Metal Securities are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ETFS Metal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ETFS Commodity Securities

Risk-Adjusted Performance

Very Weak

Over the last 90 days ETFS Commodity Securities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ETFS Commodity is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ETFS Metal and ETFS Commodity

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

The idea behind ETFS Metal Securities and ETFS Commodity Securities 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.