Correlation Between Silver Futures and Micro E
Can any of the company-specific risk be diversified away by investing in both Silver Futures and Micro E 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 Silver Futures and Micro E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silver Futures and Micro E mini Russell, you can compare the effects of market volatilities on Silver Futures and Micro E 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 Silver Futures with a short position of Micro E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Futures and Micro E.
Diversification Opportunities for Silver Futures and Micro E
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Silver and Micro is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Silver Futures and Micro E mini Russell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro E mini and Silver Futures 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 Silver Futures are associated (or correlated) with Micro E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro E mini has no effect on the direction of Silver Futures i.e., Silver Futures and Micro E go up and down completely randomly.
Pair Corralation between Silver Futures and Micro E
Assuming the 90 days horizon Silver Futures is expected to generate 1.42 times more return on investment than Micro E. However, Silver Futures is 1.42 times more volatile than Micro E mini Russell. It trades about 0.06 of its potential returns per unit of risk. Micro E mini Russell is currently generating about 0.06 per unit of risk. If you would invest 2,320 in Silver Futures on August 28, 2024 and sell it today you would earn a total of 830.00 from holding Silver Futures or generate 35.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Silver Futures vs. Micro E mini Russell
Performance |
| Timeline |
| Silver Futures |
| Micro E mini |
Silver Futures and Micro E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silver Futures and Micro E
The main advantage of trading using opposite Silver Futures and Micro E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silver Futures position performs unexpectedly, Micro E 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 Micro E will offset losses from the drop in Micro E's long position.| Silver Futures vs. Sugar | Silver Futures vs. Nasdaq 100 | Silver Futures vs. Mini Dow Jones | Silver Futures vs. Five Year Treasury Note |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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