Correlation Between Sprott Physical and ASA Gold
Can any of the company-specific risk be diversified away by investing in both Sprott Physical and ASA Gold 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 ASA Gold 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 ASA Gold and, you can compare the effects of market volatilities on Sprott Physical and ASA Gold 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 ASA Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and ASA Gold.
Diversification Opportunities for Sprott Physical and ASA Gold
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sprott and ASA is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and ASA Gold and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASA Gold 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 ASA Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASA Gold has no effect on the direction of Sprott Physical i.e., Sprott Physical and ASA Gold go up and down completely randomly.
Pair Corralation between Sprott Physical and ASA Gold
Considering the 90-day investment horizon Sprott Physical is expected to generate 1.2 times less return on investment than ASA Gold. But when comparing it to its historical volatility, Sprott Physical Gold is 1.44 times less risky than ASA Gold. It trades about 0.07 of its potential returns per unit of risk. ASA Gold and is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,512 in ASA Gold and on November 2, 2024 and sell it today you would earn a total of 827.00 from holding ASA Gold and or generate 54.7% 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. ASA Gold and
Performance |
| Timeline |
| Sprott Physical Gold |
| ASA Gold |
Sprott Physical and ASA Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Physical and ASA Gold
The main advantage of trading using opposite Sprott Physical and ASA Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, ASA Gold 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 ASA Gold will offset losses from the drop in ASA Gold's long position.| Sprott Physical vs. Sprott Physical Silver | Sprott Physical vs. Sprott Physical Platinum | Sprott Physical vs. Blue Owl Capital | Sprott Physical vs. Ares Management LP |
| ASA Gold vs. AngloGold Ashanti plc | ASA Gold vs. Sprott Physical Gold | ASA Gold vs. Gold Fields Ltd | ASA Gold vs. Harmony Gold 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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