Correlation Between Sprott Junior and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Sprott Junior and SPDR SP 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 Junior and SPDR SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Junior Copper and SPDR SP Global, you can compare the effects of market volatilities on Sprott Junior and SPDR SP 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 Junior with a short position of SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Junior and SPDR SP.
Diversification Opportunities for Sprott Junior and SPDR SP
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sprott and SPDR is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Junior Copper and SPDR SP Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Global and Sprott Junior 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 Junior Copper are associated (or correlated) with SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Global has no effect on the direction of Sprott Junior i.e., Sprott Junior and SPDR SP go up and down completely randomly.
Pair Corralation between Sprott Junior and SPDR SP
Given the investment horizon of 90 days Sprott Junior Copper is expected to generate 1.88 times more return on investment than SPDR SP. However, Sprott Junior is 1.88 times more volatile than SPDR SP Global. It trades about 0.03 of its potential returns per unit of risk. SPDR SP Global is currently generating about 0.02 per unit of risk. If you would invest 1,909 in Sprott Junior Copper on August 28, 2024 and sell it today you would earn a total of 293.00 from holding Sprott Junior Copper or generate 15.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Junior Copper vs. SPDR SP Global
Performance |
| Timeline |
| Sprott Junior Copper |
| SPDR SP Global |
Sprott Junior and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Junior and SPDR SP
The main advantage of trading using opposite Sprott Junior and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Junior position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP's long position.| Sprott Junior vs. Sprott Lithium Miners | Sprott Junior vs. Sprott Energy Transition | Sprott Junior vs. Sprott Junior Uranium | Sprott Junior vs. Sprott Nickel Miners |
| SPDR SP vs. FlexShares Morningstar Global | SPDR SP vs. SPDR SP North | SPDR SP vs. abrdn Physical Precious | SPDR SP vs. SPDR SP Global |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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