Correlation Between Sprott Physical and General American
Can any of the company-specific risk be diversified away by investing in both Sprott Physical and General American 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 General American 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 General American Investors, you can compare the effects of market volatilities on Sprott Physical and General American 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 General American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and General American.
Diversification Opportunities for Sprott Physical and General American
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sprott and General is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and General American Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General American Inv 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 General American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General American Inv has no effect on the direction of Sprott Physical i.e., Sprott Physical and General American go up and down completely randomly.
Pair Corralation between Sprott Physical and General American
Considering the 90-day investment horizon Sprott Physical is expected to generate 1.71 times less return on investment than General American. In addition to that, Sprott Physical is 1.56 times more volatile than General American Investors. It trades about 0.05 of its total potential returns per unit of risk. General American Investors is currently generating about 0.14 per unit of volatility. If you would invest 3,399 in General American Investors on August 29, 2024 and sell it today you would earn a total of 1,686 from holding General American Investors or generate 49.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Physical Gold vs. General American Investors
Performance |
| Timeline |
| Sprott Physical Gold |
| General American Inv |
Sprott Physical and General American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Physical and General American
The main advantage of trading using opposite Sprott Physical and General American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, General American 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 General American will offset losses from the drop in General American's long position.| Sprott Physical vs. Aquagold International | Sprott Physical vs. Morningstar Unconstrained Allocation | Sprott Physical vs. High Yield Municipal Fund | Sprott Physical vs. Thrivent High Yield |
| General American vs. Blackrock Muniyield | General American vs. Allianzgi Equity Convertible | General American vs. MFS Investment Grade | General American vs. Eaton Vance National |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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