Correlation Between Sprott Physical and IShares MSCI

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

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

Diversification Opportunities for Sprott Physical and IShares MSCI

0.73

Correlation Coefficient

Sprott Physical  IShares MSCI

Poor diversification

The 3 months correlation between Sprott and IShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Silver and iShares MSCI World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI World and Sprott 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 Sprott Physical Silver are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI World has no effect on the direction of Sprott Physical i.e., Sprott Physical and IShares MSCI go up and down completely randomly.

Pair Corralation between Sprott Physical and IShares MSCI

Given the investment horizon of 90 days Sprott Physical Silver is expected to generate 1.97 times more return on investment than IShares MSCI. However, Sprott Physical is 1.97 times more volatile than iShares MSCI World. It trades about 0.15 of its potential returns per unit of risk. iShares MSCI World is currently generating about 0.23 per unit of risk. If you would invest  1,088  in Sprott Physical Silver on May 3, 2025 and sell it today you would earn a total of  154.00  from holding Sprott Physical Silver or generate 14.15% return on investment over 90 days.

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

Sprott Physical Silver  vs.  iShares MSCI World

Sprott Physical Silver

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Silver are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Sprott Physical showed solid returns over the last few months and may actually be approaching a breakup point.

iShares MSCI World

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI World are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite weak primary indicators, IShares MSCI may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Sprott Physical and IShares MSCI

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

The idea behind Sprott Physical Silver and iShares MSCI World 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.