Correlation Between Sprott Gold and American Beacon
Can any of the company-specific risk be diversified away by investing in both Sprott Gold and American Beacon 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 Gold and American Beacon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprott Gold Equity and American Beacon Large, you can compare the effects of market volatilities on Sprott Gold and American Beacon 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 Gold with a short position of American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Gold and American Beacon.
Diversification Opportunities for Sprott Gold and American Beacon
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sprott and American is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Equity and American Beacon Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Large and Sprott Gold 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 Gold Equity are associated (or correlated) with American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Large has no effect on the direction of Sprott Gold i.e., Sprott Gold and American Beacon go up and down completely randomly.
Pair Corralation between Sprott Gold and American Beacon
Assuming the 90 days horizon Sprott Gold Equity is expected to generate 1.8 times more return on investment than American Beacon. However, Sprott Gold is 1.8 times more volatile than American Beacon Large. It trades about 0.21 of its potential returns per unit of risk. American Beacon Large is currently generating about 0.37 per unit of risk. If you would invest 5,351 in Sprott Gold Equity on November 2, 2024 and sell it today you would earn a total of 261.00 from holding Sprott Gold Equity or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Sprott Gold Equity vs. American Beacon Large
Performance |
| Timeline |
| Sprott Gold Equity |
| American Beacon Large |
Sprott Gold and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Gold and American Beacon
The main advantage of trading using opposite Sprott Gold and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Gold position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Sprott Gold vs. Sprott Junior Gold | Sprott Gold vs. Sprott Gold Miners | Sprott Gold vs. Europac Gold Fund | Sprott Gold vs. US Global GO |
| American Beacon vs. Madison Diversified Income | American Beacon vs. Mainstay Conservative Allocation | American Beacon vs. American Funds Conservative | American Beacon vs. Diversified Income Fund |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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