Correlation Between Sprott Physical and Gold Fields
Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Gold Fields 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 Gold Fields 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 Gold Fields Ltd, you can compare the effects of market volatilities on Sprott Physical and Gold Fields 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 Gold Fields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Gold Fields.
Diversification Opportunities for Sprott Physical and Gold Fields
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sprott and Gold is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Gold Fields Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Fields 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 Gold Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Fields has no effect on the direction of Sprott Physical i.e., Sprott Physical and Gold Fields go up and down completely randomly.
Pair Corralation between Sprott Physical and Gold Fields
Considering the 90-day investment horizon Sprott Physical Gold is expected to generate 0.72 times more return on investment than Gold Fields. However, Sprott Physical Gold is 1.39 times less risky than Gold Fields. It trades about -0.12 of its potential returns per unit of risk. Gold Fields Ltd is currently generating about -0.19 per unit of risk. If you would invest 2,455 in Sprott Physical Gold on September 20, 2024 and sell it today you would lose (82.00) from holding Sprott Physical Gold or give up 3.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Physical Gold vs. Gold Fields Ltd
Performance |
| Timeline |
| Sprott Physical Gold |
| Gold Fields |
Sprott Physical and Gold Fields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Physical and Gold Fields
The main advantage of trading using opposite Sprott Physical and Gold Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, Gold Fields 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 Gold Fields will offset losses from the drop in Gold Fields' 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 |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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