Correlation Between Sprott Focus and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Sprott Focus and Dow Jones 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 Focus and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Focus Trust and Dow Jones Industrial, you can compare the effects of market volatilities on Sprott Focus and Dow Jones 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 Focus with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Focus and Dow Jones.
Diversification Opportunities for Sprott Focus and Dow Jones
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sprott and Dow is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Focus Trust and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Sprott Focus 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 Focus Trust are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Sprott Focus i.e., Sprott Focus and Dow Jones go up and down completely randomly.
Pair Corralation between Sprott Focus and Dow Jones
Given the investment horizon of 90 days Sprott Focus is expected to generate 1.56 times less return on investment than Dow Jones. In addition to that, Sprott Focus is 1.02 times more volatile than Dow Jones Industrial. It trades about 0.16 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.25 per unit of volatility. If you would invest 4,238,757 in Dow Jones Industrial on August 29, 2024 and sell it today you would earn a total of 233,449 from holding Dow Jones Industrial or generate 5.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Focus Trust vs. Dow Jones Industrial
Performance |
| Timeline |
Sprott Focus and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Sprott Focus Trust
Pair trading matchups for Sprott Focus
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Sprott Focus and Dow Jones
The main advantage of trading using opposite Sprott Focus and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Focus position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Sprott Focus vs. MFS Investment Grade | Sprott Focus vs. Invesco High Income | Sprott Focus vs. Eaton Vance National | Sprott Focus vs. Nuveen California Select |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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