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 MSCI 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

0.54

Correlation Coefficient

IShares Core  ZKB Silver

Very weak diversification

The 3 months correlation between IShares and ZKB is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI 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 MSCI 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 is expected to generate 2.33 times less return on investment than ZKB Silver. But when comparing it to its historical volatility, iShares Core MSCI is 2.06 times less risky than ZKB Silver. It trades about 0.05 of its potential returns per unit of risk. ZKB Silver ETF is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  11,774  in ZKB Silver ETF on October 7, 2024 and sell it today you would earn a total of  2,836  from holding ZKB Silver ETF or generate 24.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.59%
Values	Daily Returns

iShares Core MSCI  vs.  ZKB Silver ETF

iShares Core MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated 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 latest weak performance, the Etf's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF 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 MSCI 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.