Correlation Between VanEck Oil and Sprott Gold
Can any of the company-specific risk be diversified away by investing in both VanEck Oil and Sprott Gold 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 VanEck Oil and Sprott Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Oil Services and Sprott Gold Miners, you can compare the effects of market volatilities on VanEck Oil and Sprott Gold 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 VanEck Oil with a short position of Sprott Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Oil and Sprott Gold.
Diversification Opportunities for VanEck Oil and Sprott Gold
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VanEck and Sprott is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Oil Services and Sprott Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Gold Miners and VanEck Oil 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 VanEck Oil Services are associated (or correlated) with Sprott Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Gold Miners has no effect on the direction of VanEck Oil i.e., VanEck Oil and Sprott Gold go up and down completely randomly.
Pair Corralation between VanEck Oil and Sprott Gold
Considering the 90-day investment horizon VanEck Oil is expected to generate 1.5 times less return on investment than Sprott Gold. In addition to that, VanEck Oil is 1.0 times more volatile than Sprott Gold Miners. It trades about 0.02 of its total potential returns per unit of risk. Sprott Gold Miners is currently generating about 0.03 per unit of volatility. If you would invest 2,423 in Sprott Gold Miners on August 28, 2024 and sell it today you would earn a total of 505.00 from holding Sprott Gold Miners or generate 20.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Oil Services vs. Sprott Gold Miners
Performance |
| Timeline |
| VanEck Oil Services |
| Sprott Gold Miners |
VanEck Oil and Sprott Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Oil and Sprott Gold
The main advantage of trading using opposite VanEck Oil and Sprott Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Oil position performs unexpectedly, Sprott Gold 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 Gold will offset losses from the drop in Sprott Gold's long position.| VanEck Oil vs. SPDR SP Oil | VanEck Oil vs. Energy Select Sector | VanEck Oil vs. VanEck Semiconductor ETF | VanEck Oil vs. Materials Select Sector |
| Sprott Gold vs. Sprott Junior Gold | Sprott Gold vs. iShares MSCI Global | Sprott Gold vs. US Global GO | Sprott Gold vs. Sprott Physical Gold |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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