Correlation Between IShares Silver and United States

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

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

Diversification Opportunities for IShares Silver and United States

0.72

Correlation Coefficient

IShares Silver  United States

Poor diversification

The 3 months correlation between IShares and United is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding iShares Silver Trust and United States Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Copper and IShares Silver 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 Silver Trust are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Copper has no effect on the direction of IShares Silver i.e., IShares Silver and United States go up and down completely randomly.

Pair Corralation between IShares Silver and United States

Considering the 90-day investment horizon iShares Silver Trust is expected to under-perform the United States. In addition to that, IShares Silver is 1.24 times more volatile than United States Copper. It trades about -0.08 of its total potential returns per unit of risk. United States Copper is currently generating about -0.01 per unit of volatility. If you would invest  2,743  in United States Copper on October 25, 2024 and sell it today you would lose (43.00) from holding United States Copper or give up 1.57% of portfolio value over 90 days.

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

iShares Silver Trust  vs.  United States Copper

iShares Silver Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Silver Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's essential indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

United States Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Copper has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, United States is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IShares Silver and United States

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

The idea behind iShares Silver Trust and United States Copper 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.