Correlation Between NYSE Composite and Sprott Physical
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Sprott Physical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Sprott Physical Gold, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Sprott Physical.
Diversification Opportunities for NYSE Composite and Sprott Physical
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NYSE and Sprott is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite 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 NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Sprott Physical go up and down completely randomly.
Pair Corralation between NYSE Composite and Sprott Physical
Assuming the 90 days trading horizon NYSE Composite is expected to generate 1.29 times less return on investment than Sprott Physical. But when comparing it to its historical volatility, NYSE Composite is 2.06 times less risky than Sprott Physical. It trades about 0.13 of its potential returns per unit of risk. Sprott Physical Gold is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,351 in Sprott Physical Gold on August 25, 2024 and sell it today you would earn a total of 157.00 from holding Sprott Physical Gold or generate 6.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
NYSE Composite vs. Sprott Physical Gold
Performance |
| Timeline |
NYSE Composite and Sprott Physical Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Sprott Physical Gold
Pair trading matchups for Sprott Physical
Pair Trading with NYSE Composite and Sprott Physical
The main advantage of trading using opposite NYSE Composite and Sprott Physical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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