Correlation Between ETFS Physical and ETFS Battery

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

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

Diversification Opportunities for ETFS Physical and ETFS Battery

-0.42

Correlation Coefficient

ETFS Physical  ETFS Battery

Very good diversification

The 3 months correlation between ETFS and ETFS is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Physical Silver and ETFS Battery Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Battery Tech and ETFS Physical 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 Physical Silver are associated (or correlated) with ETFS Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Battery Tech has no effect on the direction of ETFS Physical i.e., ETFS Physical and ETFS Battery go up and down completely randomly.

Pair Corralation between ETFS Physical and ETFS Battery

Assuming the 90 days trading horizon ETFS Physical Silver is expected to generate 0.94 times more return on investment than ETFS Battery. However, ETFS Physical Silver is 1.06 times less risky than ETFS Battery. It trades about 0.22 of its potential returns per unit of risk. ETFS Battery Tech is currently generating about -0.05 per unit of risk. If you would invest  4,359  in ETFS Physical Silver on December 30, 2024 and sell it today you would earn a total of  688.00  from holding ETFS Physical Silver or generate 15.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

ETFS Physical Silver  vs.  ETFS Battery Tech

ETFS Physical Silver

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ETFS Physical Silver are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, ETFS Physical sustained solid returns over the last few months and may actually be approaching a breakup point.

ETFS Battery Tech

Risk-Adjusted Performance

Very Weak

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

Pair Trading with ETFS Physical and ETFS Battery

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

The idea behind ETFS Physical Silver and ETFS Battery Tech 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.