Correlation Between Sprott Energy and Sprott Junior
Can any of the company-specific risk be diversified away by investing in both Sprott Energy 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 Sprott Energy and Sprott Junior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Energy Transition and Sprott Junior Copper, you can compare the effects of market volatilities on Sprott Energy 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 Sprott Energy with a short position of Sprott Junior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Energy and Sprott Junior.
Diversification Opportunities for Sprott Energy and Sprott Junior
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sprott and Sprott is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Energy Transition 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 Sprott Energy 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 Energy Transition 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 Sprott Energy i.e., Sprott Energy and Sprott Junior go up and down completely randomly.
Pair Corralation between Sprott Energy and Sprott Junior
Given the investment horizon of 90 days Sprott Energy Transition is expected to under-perform the Sprott Junior. In addition to that, Sprott Energy is 1.02 times more volatile than Sprott Junior Copper. It trades about -0.07 of its total potential returns per unit of risk. Sprott Junior Copper is currently generating about -0.04 per unit of volatility. If you would invest 2,239 in Sprott Junior Copper on August 24, 2024 and sell it today you would lose (42.00) from holding Sprott Junior Copper or give up 1.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Energy Transition vs. Sprott Junior Copper
Performance |
| Timeline |
| Sprott Energy Transition |
| Sprott Junior Copper |
Sprott Energy and Sprott Junior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Energy and Sprott Junior
The main advantage of trading using opposite Sprott Energy and Sprott Junior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Energy 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.| Sprott Energy vs. Sprott Nickel Miners | Sprott Energy vs. Sprott Uranium Miners | Sprott Energy vs. Aquagold International | Sprott Energy vs. Morningstar Unconstrained Allocation |
| Sprott Junior vs. Sprott Lithium Miners | Sprott Junior vs. Sprott Energy Transition | Sprott Junior vs. Sprott Junior Uranium | Sprott Junior 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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