Correlation Between Farmland Partners and IShares Silver

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

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

Diversification Opportunities for Farmland Partners and IShares Silver

-0.74

Correlation Coefficient

Farmland Partners  IShares Silver

Pay attention - limited upside

The 3 months correlation between Farmland and IShares is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Farmland Partners 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 Farmland Partners 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 Farmland Partners 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 Farmland Partners i.e., Farmland Partners and IShares Silver go up and down completely randomly.

Pair Corralation between Farmland Partners and IShares Silver

Considering the 90-day investment horizon Farmland Partners is expected to under-perform the IShares Silver. But the stock apears to be less risky and, when comparing its historical volatility, Farmland Partners is 1.02 times less risky than IShares Silver. The stock trades about -0.02 of its potential returns per unit of risk. The iShares Silver Trust is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,099  in iShares Silver Trust on January 24, 2024 and sell it today you would earn a total of  394.00  from holding iShares Silver Trust or generate 18.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.67%
Values	Daily Returns

Farmland Partners  vs.  iShares Silver Trust

Farmland Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Farmland Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Farmland Partners is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

iShares Silver Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Silver Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, IShares Silver showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Farmland Partners and IShares Silver

The main advantage of trading using opposite Farmland Partners and IShares Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmland Partners 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 Farmland Partners 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.