Correlation Between Sprott Physical and FG Acquisition
Can any of the company-specific risk be diversified away by investing in both Sprott Physical and FG Acquisition 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 FG Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Physical Gold and FG Acquisition Corp, you can compare the effects of market volatilities on Sprott Physical and FG Acquisition 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 FG Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and FG Acquisition.
Diversification Opportunities for Sprott Physical and FG Acquisition
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sprott and FGAA-U is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and FG Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FG Acquisition Corp 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 Gold are associated (or correlated) with FG Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FG Acquisition Corp has no effect on the direction of Sprott Physical i.e., Sprott Physical and FG Acquisition go up and down completely randomly.
Pair Corralation between Sprott Physical and FG Acquisition
Assuming the 90 days trading horizon Sprott Physical Gold is expected to generate 4.74 times more return on investment than FG Acquisition. However, Sprott Physical is 4.74 times more volatile than FG Acquisition Corp. It trades about 0.05 of its potential returns per unit of risk. FG Acquisition Corp is currently generating about 0.07 per unit of risk. If you would invest 2,410 in Sprott Physical Gold on September 12, 2024 and sell it today you would earn a total of 1,145 from holding Sprott Physical Gold or generate 47.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.85% |
| Values | Daily Returns |
Sprott Physical Gold vs. FG Acquisition Corp
Performance |
| Timeline |
| Sprott Physical Gold |
| FG Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Sprott Physical and FG Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Physical and FG Acquisition
The main advantage of trading using opposite Sprott Physical and FG Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, FG Acquisition 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 FG Acquisition will offset losses from the drop in FG Acquisition's long position.| Sprott Physical vs. Brompton Lifeco Split | Sprott Physical vs. North American Financial | Sprott Physical vs. Prime Dividend Corp | Sprott Physical vs. Financial 15 Split |
| FG Acquisition vs. Westshore Terminals Investment | FG Acquisition vs. Mako Mining Corp | FG Acquisition vs. Dream Industrial Real | FG Acquisition vs. Nicola Mining |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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