Correlation Between IShares Gold and Sprott Physical
Can any of the company-specific risk be diversified away by investing in both IShares Gold and Sprott Physical 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 Gold and Sprott Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Gold Trust and Sprott Physical Gold, you can compare the effects of market volatilities on IShares Gold and Sprott Physical 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 Gold with a short position of Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Gold and Sprott Physical.
Diversification Opportunities for IShares Gold and Sprott Physical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Sprott is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding iShares Gold Trust and Sprott Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Gold and IShares 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 iShares Gold Trust are associated (or correlated) with Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Gold has no effect on the direction of IShares Gold i.e., IShares Gold and Sprott Physical go up and down completely randomly.
Pair Corralation between IShares Gold and Sprott Physical
Considering the 90-day investment horizon iShares Gold Trust is expected to generate 0.75 times more return on investment than Sprott Physical. However, iShares Gold Trust is 1.34 times less risky than Sprott Physical. It trades about 0.1 of its potential returns per unit of risk. Sprott Physical Gold is currently generating about 0.07 per unit of risk. If you would invest 3,520 in iShares Gold Trust on November 5, 2024 and sell it today you would earn a total of 1,756 from holding iShares Gold Trust or generate 49.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
iShares Gold Trust vs. Sprott Physical Gold
Performance |
| Timeline |
| iShares Gold Trust |
| Sprott Physical Gold |
IShares Gold and Sprott Physical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Gold and Sprott Physical
The main advantage of trading using opposite IShares Gold and Sprott Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Gold position performs unexpectedly, Sprott Physical 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 Physical will offset losses from the drop in Sprott Physical's long position.| IShares Gold vs. iShares Silver Trust | IShares Gold vs. VanEck Gold Miners | IShares Gold vs. SPDR Gold Shares | IShares Gold vs. Invesco DB Commodity |
| Sprott Physical vs. Sprott Physical Silver | Sprott Physical vs. Sprott Physical Platinum | Sprott Physical vs. Blue Owl Capital | Sprott Physical vs. Ares Management LP |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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