Correlation Between Advantage Solutions and IShares Silver

Can any of the company-specific risk be diversified away by investing in both Advantage Solutions and IShares Silver 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 Advantage Solutions and IShares Silver into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advantage Solutions and iShares Silver Trust, you can compare the effects of market volatilities on Advantage Solutions and IShares Silver 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 Advantage Solutions with a short position of IShares Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advantage Solutions and IShares Silver.

Diversification Opportunities for Advantage Solutions and IShares Silver

0.64

Correlation Coefficient

Advantage Solutions  IShares Silver

Poor diversification

The 3 months correlation between Advantage and IShares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Advantage Solutions and iShares Silver Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Silver Trust and Advantage Solutions 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 Advantage Solutions are associated (or correlated) with IShares Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Silver Trust has no effect on the direction of Advantage Solutions i.e., Advantage Solutions and IShares Silver go up and down completely randomly.

Pair Corralation between Advantage Solutions and IShares Silver

Considering the 90-day investment horizon Advantage Solutions is expected to generate 2.91 times less return on investment than IShares Silver. In addition to that, Advantage Solutions is 1.2 times more volatile than iShares Silver Trust. It trades about 0.07 of its total potential returns per unit of risk. iShares Silver Trust is currently generating about 0.25 per unit of volatility. If you would invest  2,234  in iShares Silver Trust on January 26, 2024 and sell it today you would earn a total of  256.00  from holding iShares Silver Trust or generate 11.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Advantage Solutions  vs.  iShares Silver Trust

Advantage Solutions

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advantage Solutions are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Advantage Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

iShares Silver Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Silver Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, IShares Silver showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advantage Solutions and IShares Silver

The main advantage of trading using opposite Advantage Solutions and IShares Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantage Solutions position performs unexpectedly, IShares Silver 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 IShares Silver will offset losses from the drop in IShares Silver's long position.

The idea behind Advantage Solutions and iShares Silver Trust 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.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.