Correlation Between Sprott Physical and SPDR FTSE
Can any of the company-specific risk be diversified away by investing in both Sprott Physical and SPDR FTSE 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 SPDR FTSE 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 SPDR FTSE International, you can compare the effects of market volatilities on Sprott Physical and SPDR FTSE 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 SPDR FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Physical and SPDR FTSE.
Diversification Opportunities for Sprott Physical and SPDR FTSE
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sprott and SPDR is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Physical Gold and SPDR FTSE International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR FTSE International 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 SPDR FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR FTSE International has no effect on the direction of Sprott Physical i.e., Sprott Physical and SPDR FTSE go up and down completely randomly.
Pair Corralation between Sprott Physical and SPDR FTSE
Considering the 90-day investment horizon Sprott Physical Gold is expected to under-perform the SPDR FTSE. In addition to that, Sprott Physical is 2.82 times more volatile than SPDR FTSE International. It trades about -0.08 of its total potential returns per unit of risk. SPDR FTSE International is currently generating about -0.2 per unit of volatility. If you would invest 3,820 in SPDR FTSE International on August 24, 2024 and sell it today you would lose (94.00) from holding SPDR FTSE International or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Physical Gold vs. SPDR FTSE International
Performance |
| Timeline |
| Sprott Physical Gold |
| SPDR FTSE International |
Sprott Physical and SPDR FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Physical and SPDR FTSE
The main advantage of trading using opposite Sprott Physical and SPDR FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Physical position performs unexpectedly, SPDR FTSE 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 SPDR FTSE will offset losses from the drop in SPDR FTSE'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 |
| SPDR FTSE vs. iShares International Treasury | SPDR FTSE vs. SPDR Bloomberg International | SPDR FTSE vs. JPMorgan International Bond | SPDR FTSE vs. SPDR Bloomberg Short |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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