Correlation Between Sprott Physical and Wilmington Capital
Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Wilmington Capital 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 Wilmington Capital 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 Wilmington Capital Management, you can compare the effects of market volatilities on Sprott Physical and Wilmington Capital 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 Wilmington Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Wilmington Capital.
Diversification Opportunities for Sprott Physical and Wilmington Capital
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sprott and Wilmington is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Wilmington Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Capital 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 Wilmington Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Capital has no effect on the direction of Sprott Physical i.e., Sprott Physical and Wilmington Capital go up and down completely randomly.
Pair Corralation between Sprott Physical and Wilmington Capital
Assuming the 90 days trading horizon Sprott Physical is expected to generate 1.33 times less return on investment than Wilmington Capital. But when comparing it to its historical volatility, Sprott Physical Gold is 1.46 times less risky than Wilmington Capital. It trades about 0.04 of its potential returns per unit of risk. Wilmington Capital Management is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 181.00 in Wilmington Capital Management on September 4, 2024 and sell it today you would earn a total of 69.00 from holding Wilmington Capital Management or generate 38.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sprott Physical Gold vs. Wilmington Capital Management
Performance |
| Timeline |
| Sprott Physical Gold |
| Wilmington Capital |
Sprott Physical and Wilmington Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Physical and Wilmington Capital
The main advantage of trading using opposite Sprott Physical and Wilmington Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, Wilmington Capital 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 Wilmington Capital will offset losses from the drop in Wilmington Capital'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 |
| Wilmington Capital vs. Queens Road Capital | Wilmington Capital vs. Westshore Terminals Investment | Wilmington Capital vs. Canadian General Investments | Wilmington Capital vs. 2028 Investment Grade |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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