Correlation Between Sprott Physical and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both Sprott Physical and Harmony 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 Harmony 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 Harmony Gold Mining, you can compare the effects of market volatilities on Sprott Physical and Harmony 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and Harmony Gold.
Diversification Opportunities for Sprott Physical and Harmony Gold
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sprott and Harmony is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Sprott Physical i.e., Sprott Physical and Harmony Gold go up and down completely randomly.
Pair Corralation between Sprott Physical and Harmony Gold
Considering the 90-day investment horizon Sprott Physical is expected to generate 3.59 times less return on investment than Harmony Gold. But when comparing it to its historical volatility, Sprott Physical Gold is 2.84 times less risky than Harmony Gold. It trades about 0.05 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 344.00 in Harmony Gold Mining on September 24, 2024 and sell it today you would earn a total of 485.00 from holding Harmony Gold Mining or generate 140.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sprott Physical Gold vs. Harmony Gold Mining
Performance |
| Timeline |
| Sprott Physical Gold |
| Harmony Gold Mining |
Sprott Physical and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Physical and Harmony Gold
The main advantage of trading using opposite Sprott Physical and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, Harmony 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| Sprott Physical vs. Sprott Physical Silver | Sprott Physical vs. Blue Owl Capital | Sprott Physical vs. Ares Management LP | Sprott Physical vs. Sprott Physical Gold |
| Harmony Gold vs. Wheaton Precious Metals | Harmony Gold vs. Royal Gold | Harmony Gold vs. Gold Fields Ltd | Harmony Gold vs. SSR 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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