Correlation Between Dow Jones and ZKB Silver
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and ZKB Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and ZKB Silver ETF, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of ZKB Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and ZKB Silver.
Diversification Opportunities for Dow Jones and ZKB Silver
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and ZKB is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and ZKB Silver go up and down completely randomly.
Pair Corralation between Dow Jones and ZKB Silver
Assuming the 90 days trading horizon Dow Jones is expected to generate 1.42 times less return on investment than ZKB Silver. But when comparing it to its historical volatility, Dow Jones Industrial is 2.43 times less risky than ZKB Silver. It trades about 0.19 of its potential returns per unit of risk. ZKB Silver ETF is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,905 in ZKB Silver ETF on September 4, 2024 and sell it today you would earn a total of 865.00 from holding ZKB Silver ETF or generate 12.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Dow Jones Industrial vs. ZKB Silver ETF
Performance |
| Timeline |
Dow Jones and ZKB Silver Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
ZKB Silver ETF
Pair trading matchups for ZKB Silver
Pair Trading with Dow Jones and ZKB Silver
The main advantage of trading using opposite Dow Jones and ZKB Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
| ZKB Silver vs. ZKB Silver ETF | ZKB Silver vs. ZKB Gold ETF | ZKB Silver vs. ZKB Gold ETF | ZKB Silver vs. ZKB Platinum ETF |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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