Correlation Between Hiscox and IShares Physical

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

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

Diversification Opportunities for Hiscox and IShares Physical

0.32

Correlation Coefficient

Hiscox  IShares Physical

Weak diversification

The 3 months correlation between Hiscox and IShares is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hiscox and iShares Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Physical Silver and Hiscox 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 Hiscox are associated (or correlated) with IShares Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Physical Silver has no effect on the direction of Hiscox i.e., Hiscox and IShares Physical go up and down completely randomly.

Pair Corralation between Hiscox and IShares Physical

Assuming the 90 days trading horizon Hiscox is expected to generate 3.01 times less return on investment than IShares Physical. But when comparing it to its historical volatility, Hiscox is 1.21 times less risky than IShares Physical. It trades about 0.01 of its potential returns per unit of risk. iShares Physical Silver is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,291  in iShares Physical Silver on October 9, 2024 and sell it today you would earn a total of  586.00  from holding iShares Physical Silver or generate 25.58% return on investment over 90 days.

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

Hiscox  vs.  iShares Physical Silver

Hiscox

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hiscox has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hiscox is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares Physical Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Physical Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Physical 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 Hiscox and IShares Physical

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

The idea behind Hiscox and iShares Physical Silver 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.