Correlation Between IShares VII and ZKB Platinum

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Can any of the company-specific risk be diversified away by investing in both IShares VII and ZKB Platinum 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 VII and ZKB Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares VII PLC and ZKB Platinum ETF, you can compare the effects of market volatilities on IShares VII and ZKB Platinum 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 VII with a short position of ZKB Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares VII and ZKB Platinum.

Diversification Opportunities for IShares VII and ZKB Platinum

0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between IShares and ZKB is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding iShares VII PLC and ZKB Platinum ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Platinum ETF and IShares VII 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 VII PLC are associated (or correlated) with ZKB Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Platinum ETF has no effect on the direction of IShares VII i.e., IShares VII and ZKB Platinum go up and down completely randomly.

Pair Corralation between IShares VII and ZKB Platinum

Assuming the 90 days trading horizon iShares VII PLC is expected to generate 0.88 times more return on investment than ZKB Platinum. However, iShares VII PLC is 1.14 times less risky than ZKB Platinum. It trades about -0.04 of its potential returns per unit of risk. ZKB Platinum ETF is currently generating about -0.09 per unit of risk. If you would invest  3,993,500  in iShares VII PLC on September 12, 2024 and sell it today you would lose (41,000) from holding iShares VII PLC or give up 1.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

iShares VII PLC  vs.  ZKB Platinum ETF

 Performance 
       Timeline  
iShares VII PLC 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in iShares VII PLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, IShares VII may actually be approaching a critical reversion point that can send shares even higher in January 2025.
ZKB Platinum ETF 

Risk-Adjusted Performance

0 of 100

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

IShares VII and ZKB Platinum Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IShares VII and ZKB Platinum

The main advantage of trading using opposite IShares VII and ZKB Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares VII position performs unexpectedly, ZKB Platinum 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 Platinum will offset losses from the drop in ZKB Platinum's long position.
The idea behind iShares VII PLC and ZKB Platinum 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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