Correlation Between IShares Silver and Global X
Can any of the company-specific risk be diversified away by investing in both IShares Silver and Global X 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 Silver and Global X into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Silver Bullion and Global X Gold, you can compare the effects of market volatilities on IShares Silver and Global X 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 Silver with a short position of Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Silver and Global X.
Diversification Opportunities for IShares Silver and Global X
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Global is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding iShares Silver Bullion and Global X Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Gold and IShares Silver 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 Silver Bullion are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Gold has no effect on the direction of IShares Silver i.e., IShares Silver and Global X go up and down completely randomly.
Pair Corralation between IShares Silver and Global X
Assuming the 90 days trading horizon iShares Silver Bullion is expected to under-perform the Global X. In addition to that, IShares Silver is 2.0 times more volatile than Global X Gold. It trades about -0.24 of its total potential returns per unit of risk. Global X Gold is currently generating about -0.07 per unit of volatility. If you would invest 1,180 in Global X Gold on August 27, 2024 and sell it today you would lose (18.00) from holding Global X Gold or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Silver Bullion vs. Global X Gold
Performance |
| Timeline |
| iShares Silver Bullion |
| Global X Gold |
IShares Silver and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Silver and Global X
The main advantage of trading using opposite IShares Silver and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Silver position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.The idea behind iShares Silver Bullion and Global X Gold 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.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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