Correlation Between IShares Silver and First Trust
Can any of the company-specific risk be diversified away by investing in both IShares Silver and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Silver Trust and First Trust Natural, you can compare the effects of market volatilities on IShares Silver and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Silver and First Trust.
Diversification Opportunities for IShares Silver and First Trust
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and First is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding iShares Silver Trust and First Trust Natural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Natural 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 Trust are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Natural has no effect on the direction of IShares Silver i.e., IShares Silver and First Trust go up and down completely randomly.
Pair Corralation between IShares Silver and First Trust
Considering the 90-day investment horizon iShares Silver Trust is expected to generate 0.86 times more return on investment than First Trust. However, iShares Silver Trust is 1.16 times less risky than First Trust. It trades about 0.04 of its potential returns per unit of risk. First Trust Natural is currently generating about 0.01 per unit of risk. If you would invest 2,023 in iShares Silver Trust on February 23, 2024 and sell it today you would earn a total of 732.00 from holding iShares Silver Trust or generate 36.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
iShares Silver Trust vs. First Trust Natural
Performance |
Timeline |
iShares Silver Trust |
First Trust Natural |
IShares Silver and First Trust Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Silver and First Trust
The main advantage of trading using opposite IShares Silver and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Silver position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.IShares Silver vs. SPDR Gold Shares | IShares Silver vs. VanEck Gold Miners | IShares Silver vs. United States Oil | IShares Silver vs. iShares Gold Trust |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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