Correlation Between Sprott Nickel and Invesco SP
Can any of the company-specific risk be diversified away by investing in both Sprott Nickel and Invesco SP 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 Invesco SP 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 Invesco SP 500, you can compare the effects of market volatilities on Sprott Nickel and Invesco SP 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 Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Nickel and Invesco SP.
Diversification Opportunities for Sprott Nickel and Invesco SP
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sprott and Invesco is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Nickel Miners and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 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 Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of Sprott Nickel i.e., Sprott Nickel and Invesco SP go up and down completely randomly.
Pair Corralation between Sprott Nickel and Invesco SP
Given the investment horizon of 90 days Sprott Nickel Miners is expected to under-perform the Invesco SP. In addition to that, Sprott Nickel is 1.49 times more volatile than Invesco SP 500. It trades about -0.05 of its total potential returns per unit of risk. Invesco SP 500 is currently generating about 0.03 per unit of volatility. If you would invest 3,239 in Invesco SP 500 on August 26, 2024 and sell it today you would earn a total of 422.00 from holding Invesco SP 500 or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 85.31% |
| Values | Daily Returns |
Sprott Nickel Miners vs. Invesco SP 500
Performance |
| Timeline |
| Sprott Nickel Miners |
| Invesco SP 500 |
Sprott Nickel and Invesco SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Nickel and Invesco SP
The main advantage of trading using opposite Sprott Nickel and Invesco SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Nickel position performs unexpectedly, Invesco SP 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 Invesco SP will offset losses from the drop in Invesco SP'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 |
| Invesco SP vs. Sprott Junior Copper | Invesco SP vs. Sprott Junior Uranium | Invesco SP 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |