Correlation Between Sprott Physical and Hut 8
Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Hut 8 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 Hut 8 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 Hut 8 Mining, you can compare the effects of market volatilities on Sprott Physical and Hut 8 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 Hut 8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Hut 8.
Diversification Opportunities for Sprott Physical and Hut 8
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sprott and Hut is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Hut 8 Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hut 8 Mining 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 Hut 8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hut 8 Mining has no effect on the direction of Sprott Physical i.e., Sprott Physical and Hut 8 go up and down completely randomly.
Pair Corralation between Sprott Physical and Hut 8
Assuming the 90 days trading horizon Sprott Physical is expected to generate 16.58 times less return on investment than Hut 8. But when comparing it to its historical volatility, Sprott Physical Gold is 6.15 times less risky than Hut 8. It trades about 0.07 of its potential returns per unit of risk. Hut 8 Mining is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,625 in Hut 8 Mining on October 14, 2024 and sell it today you would earn a total of 1,754 from holding Hut 8 Mining or generate 107.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Physical Gold vs. Hut 8 Mining
Performance |
| Timeline |
| Sprott Physical Gold |
| Hut 8 Mining |
Sprott Physical and Hut 8 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Physical and Hut 8
The main advantage of trading using opposite Sprott Physical and Hut 8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, Hut 8 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 Hut 8 will offset losses from the drop in Hut 8's long position.| Sprott Physical vs. Sprott Physical Gold | Sprott Physical vs. Sprott Physical Silver | Sprott Physical vs. Sprott Physical Platinum | Sprott Physical vs. Wheaton Precious Metals |
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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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