Correlation Between ZKB Palladium and IShares Corp

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

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

Diversification Opportunities for ZKB Palladium and IShares Corp

-0.4

Correlation Coefficient

ZKB Palladium  IShares Corp

Very good diversification

The 3 months correlation between ZKB and IShares is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding ZKB Palladium ETF and iShares Corp Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Corp Bond and ZKB Palladium 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 ZKB Palladium ETF are associated (or correlated) with IShares Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Corp Bond has no effect on the direction of ZKB Palladium i.e., ZKB Palladium and IShares Corp go up and down completely randomly.

Pair Corralation between ZKB Palladium and IShares Corp

Assuming the 90 days trading horizon ZKB Palladium ETF is expected to generate 8.09 times more return on investment than IShares Corp. However, ZKB Palladium is 8.09 times more volatile than iShares Corp Bond. It trades about 0.02 of its potential returns per unit of risk. iShares Corp Bond is currently generating about 0.0 per unit of risk. If you would invest  24,000  in ZKB Palladium ETF on September 28, 2024 and sell it today you would earn a total of  715.00  from holding ZKB Palladium ETF or generate 2.98% return on investment over 90 days.

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

ZKB Palladium ETF  vs.  iShares Corp Bond

ZKB Palladium ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZKB Palladium ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ZKB Palladium is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iShares Corp Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Corp Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, IShares Corp is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with ZKB Palladium and IShares Corp

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

The idea behind ZKB Palladium ETF and iShares Corp Bond 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.