Correlation Between IShares Silver and WisdomTree Efficient

Can any of the company-specific risk be diversified away by investing in both IShares Silver and WisdomTree Efficient 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 WisdomTree Efficient 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 WisdomTree Efficient Gold, you can compare the effects of market volatilities on IShares Silver and WisdomTree Efficient 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 WisdomTree Efficient. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Silver and WisdomTree Efficient.

Diversification Opportunities for IShares Silver and WisdomTree Efficient

0.98

Correlation Coefficient

IShares Silver  WisdomTree Efficient

Almost no diversification

The 3 months correlation between IShares and WisdomTree is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares Silver Trust and WisdomTree Efficient Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Efficient Gold 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 WisdomTree Efficient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Efficient Gold has no effect on the direction of IShares Silver i.e., IShares Silver and WisdomTree Efficient go up and down completely randomly.

Pair Corralation between IShares Silver and WisdomTree Efficient

Considering the 90-day investment horizon IShares Silver is expected to generate 2.65 times less return on investment than WisdomTree Efficient. But when comparing it to its historical volatility, iShares Silver Trust is 1.85 times less risky than WisdomTree Efficient. It trades about 0.21 of its potential returns per unit of risk. WisdomTree Efficient Gold is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  2,826  in WisdomTree Efficient Gold on December 30, 2024 and sell it today you would earn a total of  1,463  from holding WisdomTree Efficient Gold or generate 51.77% return on investment over 90 days.

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

iShares Silver Trust  vs.  WisdomTree Efficient Gold

iShares Silver Trust

Risk-Adjusted Performance

Solid

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

WisdomTree Efficient Gold

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Efficient Gold are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, WisdomTree Efficient displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Silver and WisdomTree Efficient

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

The idea behind iShares Silver Trust and WisdomTree Efficient 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.