Correlation Between SPDR Russell and Sprott Junior
Can any of the company-specific risk be diversified away by investing in both SPDR Russell and Sprott Junior 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 SPDR Russell and Sprott Junior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR Russell 1000 and Sprott Junior Copper, you can compare the effects of market volatilities on SPDR Russell and Sprott Junior 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 SPDR Russell with a short position of Sprott Junior. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR Russell and Sprott Junior.
Diversification Opportunities for SPDR Russell and Sprott Junior
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SPDR and Sprott is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SPDR Russell 1000 and Sprott Junior Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Junior Copper and SPDR Russell 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 SPDR Russell 1000 are associated (or correlated) with Sprott Junior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Junior Copper has no effect on the direction of SPDR Russell i.e., SPDR Russell and Sprott Junior go up and down completely randomly.
Pair Corralation between SPDR Russell and Sprott Junior
Given the investment horizon of 90 days SPDR Russell 1000 is expected to under-perform the Sprott Junior. But the etf apears to be less risky and, when comparing its historical volatility, SPDR Russell 1000 is 3.25 times less risky than Sprott Junior. The etf trades about -0.03 of its potential returns per unit of risk. The Sprott Junior Copper is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,869 in Sprott Junior Copper on November 28, 2024 and sell it today you would earn a total of 24.00 from holding Sprott Junior Copper or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SPDR Russell 1000 vs. Sprott Junior Copper
Performance |
| Timeline |
| SPDR Russell 1000 |
| Sprott Junior Copper |
SPDR Russell and Sprott Junior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR Russell and Sprott Junior
The main advantage of trading using opposite SPDR Russell and Sprott Junior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR Russell position performs unexpectedly, Sprott Junior 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 Junior will offset losses from the drop in Sprott Junior's long position.| SPDR Russell vs. SPDR Russell 1000 | SPDR Russell vs. SPDR MSCI USA | SPDR Russell vs. SPDR SP 400 | SPDR Russell vs. SPDR MSCI EAFE |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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