Correlation Between IShares Physical and GoldMining
Can any of the company-specific risk be diversified away by investing in both IShares Physical and GoldMining 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 Physical and GoldMining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Physical Silver and GoldMining, you can compare the effects of market volatilities on IShares Physical and GoldMining 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 Physical with a short position of GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Physical and GoldMining.
Diversification Opportunities for IShares Physical and GoldMining
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IShares and GoldMining is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding iShares Physical Silver and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining and IShares Physical 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 Physical Silver are associated (or correlated) with GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of IShares Physical i.e., IShares Physical and GoldMining go up and down completely randomly.
Pair Corralation between IShares Physical and GoldMining
Assuming the 90 days trading horizon iShares Physical Silver is expected to generate 0.58 times more return on investment than GoldMining. However, iShares Physical Silver is 1.72 times less risky than GoldMining. It trades about 0.08 of its potential returns per unit of risk. GoldMining is currently generating about 0.04 per unit of risk. If you would invest 2,142 in iShares Physical Silver on November 3, 2024 and sell it today you would earn a total of 860.00 from holding iShares Physical Silver or generate 40.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 49.8% |
| Values | Daily Returns |
iShares Physical Silver vs. GoldMining
Performance |
| Timeline |
| iShares Physical Silver |
| GoldMining |
IShares Physical and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Physical and GoldMining
The main advantage of trading using opposite IShares Physical and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Physical position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| IShares Physical vs. Vitec Software Group | IShares Physical vs. Learning Technologies Group | IShares Physical vs. Take Two Interactive Software | IShares Physical vs. Check Point Software |
| GoldMining vs. Summit Materials Cl | GoldMining vs. First Majestic Silver | GoldMining vs. Qurate Retail Series | GoldMining vs. Lundin Mining Corp |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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