Correlation Between Sprott Nickel and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Sprott Nickel and SPDR 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 SPDR 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 SPDR SP Metals, you can compare the effects of market volatilities on Sprott Nickel and SPDR 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Nickel and SPDR SP.
Diversification Opportunities for Sprott Nickel and SPDR SP
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sprott and SPDR is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Nickel Miners and SPDR SP Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP Metals 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP Metals has no effect on the direction of Sprott Nickel i.e., Sprott Nickel and SPDR SP go up and down completely randomly.
Pair Corralation between Sprott Nickel and SPDR SP
Given the investment horizon of 90 days Sprott Nickel Miners is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, Sprott Nickel Miners is 1.63 times less risky than SPDR SP. The etf trades about -0.25 of its potential returns per unit of risk. The SPDR SP Metals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 6,469 in SPDR SP Metals on August 24, 2024 and sell it today you would earn a total of 379.00 from holding SPDR SP Metals or generate 5.86% 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. SPDR SP Metals
Performance |
| Timeline |
| Sprott Nickel Miners |
| SPDR SP Metals |
Sprott Nickel and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Nickel and SPDR SP
The main advantage of trading using opposite Sprott Nickel and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Nickel position performs unexpectedly, SPDR 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 SPDR SP will offset losses from the drop in SPDR 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 |
| SPDR SP vs. Materials Select Sector | SPDR SP vs. SPDR SP Oil | SPDR SP vs. SPDR SP Retail | SPDR SP vs. SPDR SP Homebuilders |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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