Correlation Between IShares Silver and Autoliv

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

Diversification Opportunities for IShares Silver and Autoliv

0.57

Correlation Coefficient

IShares Silver  Autoliv

Very weak diversification

The 3 months correlation between IShares and Autoliv is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding iShares Silver Trust and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv 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 Autoliv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autoliv has no effect on the direction of IShares Silver i.e., IShares Silver and Autoliv go up and down completely randomly.

Pair Corralation between IShares Silver and Autoliv

Considering the 90-day investment horizon iShares Silver Trust is expected to generate 1.5 times more return on investment than Autoliv. However, IShares Silver is 1.5 times more volatile than Autoliv. It trades about 0.23 of its potential returns per unit of risk. Autoliv is currently generating about 0.04 per unit of risk. If you would invest  2,258  in iShares Silver Trust on February 23, 2024 and sell it today you would earn a total of  509.00  from holding iShares Silver Trust or generate 22.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.73%
Values	Daily Returns

iShares Silver Trust  vs.  Autoliv

iShares Silver Trust

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Silver Trust are ranked lower than 19 (%) 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.

Autoliv

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Autoliv are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Autoliv may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with IShares Silver and Autoliv

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

The idea behind iShares Silver Trust and Autoliv 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.