Correlation Between SPDR Gold and Sprott Junior
Can any of the company-specific risk be diversified away by investing in both SPDR Gold 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 SPDR Gold and Sprott Junior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Gold Shares and Sprott Junior Gold, you can compare the effects of market volatilities on SPDR Gold 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 SPDR Gold with a short position of Sprott Junior. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Gold and Sprott Junior.
Diversification Opportunities for SPDR Gold and Sprott Junior
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between SPDR and Sprott is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Gold Shares and Sprott Junior Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Junior Gold and SPDR Gold 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 SPDR Gold Shares 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 Gold has no effect on the direction of SPDR Gold i.e., SPDR Gold and Sprott Junior go up and down completely randomly.
Pair Corralation between SPDR Gold and Sprott Junior
Considering the 90-day investment horizon SPDR Gold is expected to generate 1.45 times less return on investment than Sprott Junior. But when comparing it to its historical volatility, SPDR Gold Shares is 2.23 times less risky than Sprott Junior. It trades about 0.15 of its potential returns per unit of risk. Sprott Junior Gold is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,619 in Sprott Junior Gold on August 27, 2024 and sell it today you would earn a total of 1,167 from holding Sprott Junior Gold or generate 44.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR Gold Shares vs. Sprott Junior Gold
Performance |
| Timeline |
| SPDR Gold Shares |
| Sprott Junior Gold |
SPDR Gold and Sprott Junior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Gold and Sprott Junior
The main advantage of trading using opposite SPDR Gold and Sprott Junior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Gold 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.| SPDR Gold vs. iShares Silver Trust | SPDR Gold vs. VanEck Gold Miners | SPDR Gold vs. SPDR SP 500 | SPDR Gold vs. United States Oil |
| Sprott Junior vs. iShares Silver Trust | Sprott Junior vs. SPDR Gold Shares | Sprott Junior vs. Newmont Goldcorp Corp | Sprott Junior vs. Direxion Daily Gold |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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