Correlation Between Sprott Nickel and American Beacon
Can any of the company-specific risk be diversified away by investing in both Sprott Nickel and American Beacon 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 Sprott Nickel and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Nickel Miners and American Beacon Select, you can compare the effects of market volatilities on Sprott Nickel and American Beacon 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 Sprott Nickel with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Nickel and American Beacon.
Diversification Opportunities for Sprott Nickel and American Beacon
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sprott and American is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Nickel Miners and American Beacon Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Select and Sprott Nickel 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 Sprott Nickel Miners are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Select has no effect on the direction of Sprott Nickel i.e., Sprott Nickel and American Beacon go up and down completely randomly.
Pair Corralation between Sprott Nickel and American Beacon
Given the investment horizon of 90 days Sprott Nickel Miners is expected to under-perform the American Beacon. In addition to that, Sprott Nickel is 1.1 times more volatile than American Beacon Select. It trades about -0.2 of its total potential returns per unit of risk. American Beacon Select is currently generating about 0.22 per unit of volatility. If you would invest 3,078 in American Beacon Select on August 25, 2024 and sell it today you would earn a total of 194.00 from holding American Beacon Select or generate 6.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Nickel Miners vs. American Beacon Select
Performance |
| Timeline |
| Sprott Nickel Miners |
| American Beacon Select |
Sprott Nickel and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Nickel and American Beacon
The main advantage of trading using opposite Sprott Nickel and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Nickel position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Sprott Nickel vs. iShares Dividend and | Sprott Nickel vs. Martin Currie Sustainable | Sprott Nickel vs. VictoryShares THB Mid | Sprott Nickel vs. Mast Global Battery |
| American Beacon vs. Sprott Junior Copper | American Beacon vs. Sprott Junior Uranium | American Beacon vs. Sprott Nickel Miners |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |