Pair is strongly diverging away from the mean. High risk of further deviation.
Regime: STRONG_DIVERGENCE (low confidence)
Correlation: 0.86 · Cointegrated: yes
Z-score: 1.64 entry / 3.07 rolling
Half-life 2.5h · Hurst 0.90 · Hedge ratio 0.39
Pair volatility: 16.50%
Backtest: 56.67% win · Sharpe -3.03 · -0.49% return · 0.72% max drawdown
Pair Analysis: Long SILVER / Short PAXG
- Roll Z-Score: 3.07 (1h) / 1.70 (4h) / 1.22 (1d)
- Note: The 1h z-score of 3.07 indicates PAXG is significantly "rich" relative to SILVER, supporting the mean-reversion case for Long SILVER / Short PAXG.
- Correlation: 0.86 (1h)
- Cointegration: True (1h/4h)
- Hedge Weights (4h): 26.4% SILVER / 73.6% PAXG
- Sentiment:
- SILVER: Bullish. Driven by a structural supply deficit (67M oz shortfall) and a 20% surge in physical investment demand.
- PAXG: Bullish. No specific idiosyncratic drivers noted; price action is largely tracking broader gold market sentiment.
Remark:
This setup is statistically compelling on shorter timeframes (1h/4h), where the elevated z-score suggests PAXG has decoupled to the upside relative to SILVER. The trade aligns with the fundamental narrative of a structural supply deficit in silver, which may provide a stronger tailwind for the long leg compared to the gold-pegged PAXG. Note that the 1d z-score is lower (1.22), suggesting the divergence is more pronounced in recent intraday volatility than in the longer-term trend.
SILVER
PAXG