Correlation Between Global X and IShares Silver

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

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

Diversification Opportunities for Global X and IShares Silver

0.93

Correlation Coefficient

Global X  IShares Silver

Almost no diversification

The 3 months correlation between Global and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Global X Gold and iShares Silver Bullion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Silver Bullion and Global X 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 Global X Gold are associated (or correlated) with IShares Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Silver Bullion has no effect on the direction of Global X i.e., Global X and IShares Silver go up and down completely randomly.

Pair Corralation between Global X and IShares Silver

Assuming the 90 days trading horizon Global X Gold is expected to generate 0.74 times more return on investment than IShares Silver. However, Global X Gold is 1.36 times less risky than IShares Silver. It trades about -0.12 of its potential returns per unit of risk. iShares Silver Bullion is currently generating about -0.16 per unit of risk. If you would invest  2,141  in Global X Gold on September 1, 2024 and sell it today you would lose (77.00) from holding Global X Gold or give up 3.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.65%
Values	Daily Returns

Global X Gold  vs.  iShares Silver Bullion

Global X Gold

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Gold are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Global X is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares Silver Bullion

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Silver Bullion are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, IShares Silver may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Global X and IShares Silver

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

The idea behind Global X Gold and iShares Silver Bullion 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.