Correlation Between Precious Metals and ZKB Silver

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

By analyzing existing cross correlation between Precious Metals And and ZKB Silver ETF, you can compare the effects of market volatilities on Precious Metals and ZKB 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 Precious Metals with a short position of ZKB Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and ZKB Silver.

Diversification Opportunities for Precious Metals and ZKB Silver

0.42

Correlation Coefficient

Precious Metals  ZKB Silver

Very weak diversification

The 3 months correlation between Precious and ZKB is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And and ZKB Silver ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZKB Silver ETF and Precious Metals 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 Precious Metals And are associated (or correlated) with ZKB Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZKB Silver ETF has no effect on the direction of Precious Metals i.e., Precious Metals and ZKB Silver go up and down completely randomly.

Pair Corralation between Precious Metals and ZKB Silver

Assuming the 90 days horizon Precious Metals And is expected to generate 1.31 times more return on investment than ZKB Silver. However, Precious Metals is 1.31 times more volatile than ZKB Silver ETF. It trades about 0.07 of its potential returns per unit of risk. ZKB Silver ETF is currently generating about 0.05 per unit of risk. If you would invest  1,633  in Precious Metals And on January 20, 2024 and sell it today you would earn a total of  242.00  from holding Precious Metals And or generate 14.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

Precious Metals And  vs.  ZKB Silver ETF

Precious Metals And

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Precious Metals And are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Precious Metals showed solid returns over the last few months and may actually be approaching a breakup point.

ZKB Silver ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZKB Silver ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, ZKB Silver is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Precious Metals and ZKB Silver

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

The idea behind Precious Metals And and ZKB Silver ETF 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 Commodity Directory module to find actively traded commodities issued by global exchanges.