Correlation Between ZKB Palladium and ZKB Gold

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

Diversification Opportunities for ZKB Palladium and ZKB Gold

0.0

Correlation Coefficient

ZKB Palladium  ZKB Gold

Pay attention - limited upside

The 3 months correlation between ZKB and ZKB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ZKB Palladium ETF and ZKB Gold ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Gold ETF 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 ZKB Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Gold ETF has no effect on the direction of ZKB Palladium i.e., ZKB Palladium and ZKB Gold go up and down completely randomly.

Pair Corralation between ZKB Palladium and ZKB Gold

If you would invest (100.00) in ZKB Gold ETF on December 21, 2024 and sell it today you would earn a total of  100.00  from holding ZKB Gold ETF or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ZKB Palladium ETF  vs.  ZKB Gold ETF

ZKB Palladium ETF

Risk-Adjusted Performance

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.

ZKB Gold ETF

Risk-Adjusted Performance

Strong

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

Pair Trading with ZKB Palladium and ZKB Gold

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

The idea behind ZKB Palladium ETF and ZKB Gold 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.