Correlation Between IShares Physical and URU Metals

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

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

Diversification Opportunities for IShares Physical and URU Metals

-0.12

Correlation Coefficient

IShares Physical  URU Metals

Good diversification

The 3 months correlation between IShares and URU is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding iShares Physical Silver and URU Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on URU Metals and IShares 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 iShares Physical Silver are associated (or correlated) with URU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of URU Metals has no effect on the direction of IShares Physical i.e., IShares Physical and URU Metals go up and down completely randomly.

Pair Corralation between IShares Physical and URU Metals

Assuming the 90 days trading horizon iShares Physical Silver is expected to generate 0.32 times more return on investment than URU Metals. However, iShares Physical Silver is 3.1 times less risky than URU Metals. It trades about 0.16 of its potential returns per unit of risk. URU Metals is currently generating about -0.14 per unit of risk. If you would invest  2,822  in iShares Physical Silver on December 21, 2024 and sell it today you would earn a total of  364.00  from holding iShares Physical Silver or generate 12.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

iShares Physical Silver  vs.  URU Metals

iShares Physical Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Physical Silver are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, IShares Physical unveiled solid returns over the last few months and may actually be approaching a breakup point.

URU Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days URU Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with IShares Physical and URU Metals

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

The idea behind iShares Physical Silver and URU Metals 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 Transaction History module to view history of all your transactions and understand their impact on performance.