Correlation Between IShares Basic and Sprott Nickel
Can any of the company-specific risk be diversified away by investing in both IShares Basic and Sprott Nickel 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 Basic and Sprott Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Basic Materials and Sprott Nickel Miners, you can compare the effects of market volatilities on IShares Basic and Sprott Nickel 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 Basic with a short position of Sprott Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Basic and Sprott Nickel.
Diversification Opportunities for IShares Basic and Sprott Nickel
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Sprott is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares Basic Materials and Sprott Nickel Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Nickel Miners and IShares Basic 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 Basic Materials are associated (or correlated) with Sprott Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Nickel Miners has no effect on the direction of IShares Basic i.e., IShares Basic and Sprott Nickel go up and down completely randomly.
Pair Corralation between IShares Basic and Sprott Nickel
Considering the 90-day investment horizon iShares Basic Materials is expected to generate 0.59 times more return on investment than Sprott Nickel. However, iShares Basic Materials is 1.68 times less risky than Sprott Nickel. It trades about -0.03 of its potential returns per unit of risk. Sprott Nickel Miners is currently generating about -0.18 per unit of risk. If you would invest 14,774 in iShares Basic Materials on August 31, 2024 and sell it today you would lose (83.00) from holding iShares Basic Materials or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Basic Materials vs. Sprott Nickel Miners
Performance |
| Timeline |
| iShares Basic Materials |
| Sprott Nickel Miners |
IShares Basic and Sprott Nickel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Basic and Sprott Nickel
The main advantage of trading using opposite IShares Basic and Sprott Nickel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Basic position performs unexpectedly, Sprott Nickel 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 Nickel will offset losses from the drop in Sprott Nickel's long position.| IShares Basic vs. Mast Global Battery | IShares Basic vs. Materials Select Sector | IShares Basic vs. Vanguard Materials Index | IShares Basic vs. SPDR SP Metals |
| Sprott Nickel vs. Freedom Day Dividend | Sprott Nickel vs. iShares MSCI China | Sprott Nickel vs. iShares Dividend and | Sprott Nickel vs. SmartETFs Dividend Builder |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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