Correlation Between Abrdn Physical and IShares Silver

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

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

Diversification Opportunities for Abrdn Physical and IShares Silver

0.99

Correlation Coefficient

Abrdn Physical  IShares Silver

No risk reduction

The 3 months correlation between Abrdn and IShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding abrdn Physical Silver and iShares Silver Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Silver Trust and Abrdn 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 abrdn Physical Silver are associated (or correlated) with IShares Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Silver Trust has no effect on the direction of Abrdn Physical i.e., Abrdn Physical and IShares Silver go up and down completely randomly.

Pair Corralation between Abrdn Physical and IShares Silver

Given the investment horizon of 90 days abrdn Physical Silver is expected to under-perform the IShares Silver. In addition to that, Abrdn Physical is 1.02 times more volatile than iShares Silver Trust. It trades about -0.12 of its total potential returns per unit of risk. iShares Silver Trust is currently generating about -0.12 per unit of volatility. If you would invest  2,540  in iShares Silver Trust on February 6, 2024 and sell it today you would lose (118.00) from holding iShares Silver Trust or give up 4.65% of portfolio value over 90 days.

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

abrdn Physical Silver  vs.  iShares Silver Trust

abrdn Physical Silver

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in abrdn Physical Silver are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Abrdn Physical reported solid returns over the last few months and may actually be approaching a breakup point.

iShares Silver Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Silver Trust are ranked lower than 12 (%) 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.

Pair Trading with Abrdn Physical and IShares Silver

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

The idea behind abrdn Physical Silver and iShares Silver Trust 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.