Correlation Between ZKB Silver and Dow Jones

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both ZKB Silver and Dow Jones 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 Silver and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ZKB Silver ETF and Dow Jones Industrial, you can compare the effects of market volatilities on ZKB Silver and Dow Jones 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 Silver with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZKB Silver and Dow Jones.

Diversification Opportunities for ZKB Silver and Dow Jones

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between ZKB and Dow is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding ZKB Silver ETF and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and ZKB 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 ZKB Silver ETF are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of ZKB Silver i.e., ZKB Silver and Dow Jones go up and down completely randomly.
    Optimize

Pair Corralation between ZKB Silver and Dow Jones

Assuming the 90 days trading horizon ZKB Silver ETF is expected to under-perform the Dow Jones. In addition to that, ZKB Silver is 2.11 times more volatile than Dow Jones Industrial. It trades about -0.19 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.37 per unit of volatility. If you would invest  4,179,460  in Dow Jones Industrial on September 5, 2024 and sell it today you would earn a total of  321,944  from holding Dow Jones Industrial or generate 7.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

ZKB Silver ETF  vs.  Dow Jones Industrial

 Performance 
       Timeline  

ZKB Silver and Dow Jones Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ZKB Silver and Dow Jones

The main advantage of trading using opposite ZKB Silver and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZKB Silver position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.
The idea behind ZKB Silver ETF and Dow Jones Industrial 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 Stocks Directory module to find actively traded stocks across global markets.

Other Complementary Tools

Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities