Correlation Between IShares Silver and SPDR Portfolio

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

Diversification Opportunities for IShares Silver and SPDR Portfolio

0.47

Correlation Coefficient

IShares Silver  SPDR Portfolio

Very weak diversification

The 3 months correlation between IShares and SPDR is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding iShares Silver Trust and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of IShares Silver i.e., IShares Silver and SPDR Portfolio go up and down completely randomly.

Pair Corralation between IShares Silver and SPDR Portfolio

Considering the 90-day investment horizon iShares Silver Trust is expected to generate 1.92 times more return on investment than SPDR Portfolio. However, IShares Silver is 1.92 times more volatile than SPDR Portfolio SP. It trades about 0.23 of its potential returns per unit of risk. SPDR Portfolio SP is currently generating about -0.17 per unit of risk. If you would invest  2,258  in iShares Silver Trust on January 25, 2024 and sell it today you would earn a total of  241.00  from holding iShares Silver Trust or generate 10.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

iShares Silver Trust  vs.  SPDR Portfolio SP

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.

SPDR Portfolio SP

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR Portfolio SP are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SPDR Portfolio is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with IShares Silver and SPDR Portfolio

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

The idea behind iShares Silver Trust and SPDR Portfolio SP 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.