Correlation Between ZKB Palladium and ZKB Platinum
Can any of the company-specific risk be diversified away by investing in both ZKB Palladium 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 ZKB Palladium and ZKB Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZKB Palladium ETF and ZKB Platinum ETF, you can compare the effects of market volatilities on ZKB Palladium 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 ZKB Palladium with a short position of ZKB Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZKB Palladium and ZKB Platinum.
Diversification Opportunities for ZKB Palladium and ZKB Platinum
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ZKB and ZKB is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ZKB Palladium ETF 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 ZKB Palladium 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 ZKB Palladium ETF 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 ZKB Palladium i.e., ZKB Palladium and ZKB Platinum go up and down completely randomly.
Pair Corralation between ZKB Palladium and ZKB Platinum
Assuming the 90 days trading horizon ZKB Palladium ETF is expected to under-perform the ZKB Platinum. In addition to that, ZKB Palladium is 1.66 times more volatile than ZKB Platinum ETF. It trades about -0.04 of its total potential returns per unit of risk. ZKB Platinum ETF is currently generating about -0.01 per unit of volatility. If you would invest 28,260 in ZKB Platinum ETF on September 4, 2024 and sell it today you would lose (3,775) from holding ZKB Platinum ETF or give up 13.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZKB Palladium ETF vs. ZKB Platinum ETF
Performance |
| Timeline |
| ZKB Palladium ETF |
| ZKB Platinum ETF |
ZKB Palladium and ZKB Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZKB Palladium and ZKB Platinum
The main advantage of trading using opposite ZKB Palladium and ZKB Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZKB Palladium 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.| ZKB Palladium vs. ZKB Platinum ETF | ZKB Palladium vs. ZKB Gold ETF | ZKB Palladium vs. ZKB Silver ETF | ZKB Palladium vs. ZKB Gold ETF |
| ZKB Platinum vs. UBSFund Solutions MSCI | ZKB Platinum vs. Vanguard SP 500 | ZKB Platinum vs. iShares VII PLC | ZKB Platinum vs. iShares Core SP |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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