Correlation Between Silver Bullion and Global X

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

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

Diversification Opportunities for Silver Bullion and Global X

0.96

Correlation Coefficient

Silver Bullion  Global X

Almost no diversification

The 3 months correlation between Silver and Global is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Silver Bullion Trust and Global X Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Gold and Silver Bullion 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 Silver Bullion Trust are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Gold has no effect on the direction of Silver Bullion i.e., Silver Bullion and Global X go up and down completely randomly.

Pair Corralation between Silver Bullion and Global X

Assuming the 90 days trading horizon Silver Bullion Trust is expected to generate 2.03 times more return on investment than Global X. However, Silver Bullion is 2.03 times more volatile than Global X Gold. It trades about 0.21 of its potential returns per unit of risk. Global X Gold is currently generating about 0.33 per unit of risk. If you would invest  1,510  in Silver Bullion Trust on December 29, 2024 and sell it today you would earn a total of  282.00  from holding Silver Bullion Trust or generate 18.68% return on investment over 90 days.

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

Silver Bullion Trust  vs.  Global X Gold

Silver Bullion Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Bullion Trust are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Silver Bullion displayed solid returns over the last few months and may actually be approaching a breakup point.

Global X Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Gold are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Global X displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silver Bullion and Global X

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

The idea behind Silver Bullion Trust and Global X Gold 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.