Correlation Between IShares Silver and Homeland Security

Can any of the company-specific risk be diversified away by investing in both IShares Silver and Homeland Security 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 Homeland Security 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 Homeland Security Cp, you can compare the effects of market volatilities on IShares Silver and Homeland Security 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 Homeland Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Silver and Homeland Security.

Diversification Opportunities for IShares Silver and Homeland Security

0.31

Correlation Coefficient

IShares Silver  Homeland Security

Weak diversification

The 3 months correlation between IShares and Homeland is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding iShares Silver Trust and Homeland Security Cp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeland Security 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 Homeland Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homeland Security has no effect on the direction of IShares Silver i.e., IShares Silver and Homeland Security go up and down completely randomly.

Pair Corralation between IShares Silver and Homeland Security

Considering the 90-day investment horizon IShares Silver is expected to generate 13.92 times less return on investment than Homeland Security. But when comparing it to its historical volatility, iShares Silver Trust is 10.29 times less risky than Homeland Security. It trades about 0.05 of its potential returns per unit of risk. Homeland Security Cp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.41  in Homeland Security Cp on March 8, 2024 and sell it today you would earn a total of  0.06  from holding Homeland Security Cp or generate 14.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

iShares Silver Trust  vs.  Homeland Security Cp

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.

Homeland Security

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Homeland Security Cp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Homeland Security exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IShares Silver and Homeland Security

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

The idea behind iShares Silver Trust and Homeland Security Cp 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.