Correlation Between Sprott Physical and Keg Royalties
Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Keg Royalties 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 Keg Royalties 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 The Keg Royalties, you can compare the effects of market volatilities on Sprott Physical and Keg Royalties 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 Keg Royalties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Keg Royalties.
Diversification Opportunities for Sprott Physical and Keg Royalties
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sprott and Keg is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and The Keg Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keg Royalties 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 Keg Royalties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keg Royalties has no effect on the direction of Sprott Physical i.e., Sprott Physical and Keg Royalties go up and down completely randomly.
Pair Corralation between Sprott Physical and Keg Royalties
Assuming the 90 days trading horizon Sprott Physical Gold is expected to generate 2.77 times more return on investment than Keg Royalties. However, Sprott Physical is 2.77 times more volatile than The Keg Royalties. It trades about 0.04 of its potential returns per unit of risk. The Keg Royalties is currently generating about 0.02 per unit of risk. If you would invest 2,334 in Sprott Physical Gold on August 25, 2024 and sell it today you would earn a total of 1,171 from holding Sprott Physical Gold or generate 50.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Physical Gold vs. The Keg Royalties
Performance |
| Timeline |
| Sprott Physical Gold |
| Keg Royalties |
Sprott Physical and Keg Royalties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Physical and Keg Royalties
The main advantage of trading using opposite Sprott Physical and Keg Royalties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, Keg Royalties 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 Keg Royalties will offset losses from the drop in Keg Royalties' 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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