Correlation Between IShares Trust and Sprott Focus
Can any of the company-specific risk be diversified away by investing in both IShares Trust and Sprott Focus 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 IShares Trust and Sprott Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Trust and Sprott Focus Trust, you can compare the effects of market volatilities on IShares Trust and Sprott Focus 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 IShares Trust with a short position of Sprott Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Trust and Sprott Focus.
Diversification Opportunities for IShares Trust and Sprott Focus
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Sprott is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding iShares Trust and Sprott Focus Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Focus Trust and IShares 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 iShares Trust are associated (or correlated) with Sprott Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Focus Trust has no effect on the direction of IShares Trust i.e., IShares Trust and Sprott Focus go up and down completely randomly.
Pair Corralation between IShares Trust and Sprott Focus
Given the investment horizon of 90 days iShares Trust is expected to generate 0.23 times more return on investment than Sprott Focus. However, iShares Trust is 4.3 times less risky than Sprott Focus. It trades about 0.11 of its potential returns per unit of risk. Sprott Focus Trust is currently generating about 0.02 per unit of risk. If you would invest 2,827 in iShares Trust on August 29, 2024 and sell it today you would earn a total of 426.00 from holding iShares Trust or generate 15.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Trust vs. Sprott Focus Trust
Performance |
| Timeline |
| iShares Trust |
| Sprott Focus Trust |
IShares Trust and Sprott Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Trust and Sprott Focus
The main advantage of trading using opposite IShares Trust and Sprott Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Trust position performs unexpectedly, Sprott Focus 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 Focus will offset losses from the drop in Sprott Focus' long position.| IShares Trust vs. iShares Edge Investment | IShares Trust vs. iShares Intl High | IShares Trust vs. iShares JP Morgan |
| Sprott Focus vs. MFS Investment Grade | Sprott Focus vs. Invesco High Income | Sprott Focus vs. Eaton Vance National | Sprott Focus vs. Nuveen California Select |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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