Correlation Between SPDR SP and ZKB Silver

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

By analyzing existing cross correlation between SPDR SP Financials and ZKB Silver ETF, you can compare the effects of market volatilities on SPDR SP and ZKB 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 SPDR SP with a short position of ZKB Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SP and ZKB Silver.

Diversification Opportunities for SPDR SP and ZKB Silver

-0.46

Correlation Coefficient

SPDR SP  ZKB Silver

Very good diversification

The 3 months correlation between SPDR and ZKB is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP Financials and ZKB Silver ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Silver ETF and SPDR SP 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 SPDR SP Financials are associated (or correlated) with ZKB Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Silver ETF has no effect on the direction of SPDR SP i.e., SPDR SP and ZKB Silver go up and down completely randomly.

Pair Corralation between SPDR SP and ZKB Silver

Assuming the 90 days trading horizon SPDR SP Financials is expected to under-perform the ZKB Silver. But the etf apears to be less risky and, when comparing its historical volatility, SPDR SP Financials is 2.75 times less risky than ZKB Silver. The etf trades about -0.37 of its potential returns per unit of risk. The ZKB Silver ETF is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  15,560  in ZKB Silver ETF on September 30, 2024 and sell it today you would lose (578.00) from holding ZKB Silver ETF or give up 3.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

SPDR SP Financials  vs.  ZKB Silver ETF

SPDR SP Financials

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR SP Financials are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SPDR SP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ZKB Silver ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZKB Silver ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, ZKB Silver is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPDR SP and ZKB Silver

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

The idea behind SPDR SP Financials and ZKB Silver ETF 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 CEOs Directory module to screen CEOs from public companies around the world.