Correlation Between First Trust and Sprott Junior
Can any of the company-specific risk be diversified away by investing in both First Trust and Sprott Junior 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 First Trust and Sprott Junior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Materials and Sprott Junior Uranium, you can compare the effects of market volatilities on First Trust and Sprott Junior 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 First Trust with a short position of Sprott Junior. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Sprott Junior.
Diversification Opportunities for First Trust and Sprott Junior
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Sprott is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Materials and Sprott Junior Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Junior Uranium and First Trust 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 First Trust Materials are associated (or correlated) with Sprott Junior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Junior Uranium has no effect on the direction of First Trust i.e., First Trust and Sprott Junior go up and down completely randomly.
Pair Corralation between First Trust and Sprott Junior
Considering the 90-day investment horizon First Trust Materials is expected to under-perform the Sprott Junior. But the etf apears to be less risky and, when comparing its historical volatility, First Trust Materials is 2.26 times less risky than Sprott Junior. The etf trades about -0.04 of its potential returns per unit of risk. The Sprott Junior Uranium is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,716 in Sprott Junior Uranium on January 10, 2025 and sell it today you would lose (403.00) from holding Sprott Junior Uranium or give up 23.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Materials vs. Sprott Junior Uranium
Performance |
| Timeline |
| First Trust Materials |
| Sprott Junior Uranium |
First Trust and Sprott Junior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Sprott Junior
The main advantage of trading using opposite First Trust and Sprott Junior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Sprott Junior 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 Sprott Junior will offset losses from the drop in Sprott Junior's long position.| First Trust vs. First Trust IndustrialsProducer | First Trust vs. First Trust Consumer | First Trust vs. First Trust Financials | First Trust vs. First Trust Energy |
| Sprott Junior vs. Mast Global Battery | Sprott Junior vs. Materials Select Sector | Sprott Junior vs. Vanguard Materials Index | Sprott Junior vs. SPDR SP Metals |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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