Correlation Between IShares Physical and DB Physical

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

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

Diversification Opportunities for IShares Physical and DB Physical

0.86

Correlation Coefficient

IShares Physical  DB Physical

Very poor diversification

The 3 months correlation between IShares and XGLS is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding iShares Physical Silver and DB Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Physical Gold and IShares Physical 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 Physical Silver are associated (or correlated) with DB Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Physical Gold has no effect on the direction of IShares Physical i.e., IShares Physical and DB Physical go up and down completely randomly.

Pair Corralation between IShares Physical and DB Physical

Assuming the 90 days trading horizon iShares Physical Silver is expected to under-perform the DB Physical. In addition to that, IShares Physical is 1.98 times more volatile than DB Physical Gold. It trades about -0.03 of its total potential returns per unit of risk. DB Physical Gold is currently generating about 0.0 per unit of volatility. If you would invest  135,775  in DB Physical Gold on September 23, 2024 and sell it today you would lose (750.00) from holding DB Physical Gold or give up 0.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

iShares Physical Silver  vs.  DB Physical Gold

iShares Physical Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Physical Silver has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Physical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

DB Physical Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DB Physical Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DB Physical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Physical and DB Physical

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

The idea behind iShares Physical Silver and DB Physical Gold 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.