Correlation Between Sprott Gold and Total Return

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Can any of the company-specific risk be diversified away by investing in both Sprott Gold and Total Return 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 Total Return 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 Total Return Bond, you can compare the effects of market volatilities on Sprott Gold and Total Return 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 Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Gold and Total Return.

Diversification Opportunities for Sprott Gold and Total Return

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Sprott and Total is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Equity and Total Return Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return Bond 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 Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return Bond has no effect on the direction of Sprott Gold i.e., Sprott Gold and Total Return go up and down completely randomly.

Pair Corralation between Sprott Gold and Total Return

Assuming the 90 days horizon Sprott Gold Equity is expected to generate 5.61 times more return on investment than Total Return. However, Sprott Gold is 5.61 times more volatile than Total Return Bond. It trades about 0.12 of its potential returns per unit of risk. Total Return Bond is currently generating about 0.1 per unit of risk. If you would invest  5,438  in Sprott Gold Equity on September 12, 2024 and sell it today you would earn a total of  221.00  from holding Sprott Gold Equity or generate 4.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sprott Gold Equity  vs.  Total Return Bond

 Performance 
       Timeline  
Sprott Gold Equity 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Gold Equity are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Sprott Gold is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.
Total Return Bond 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Total Return Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Total Return is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sprott Gold and Total Return Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sprott Gold and Total Return

The main advantage of trading using opposite Sprott Gold and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Gold position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.
The idea behind Sprott Gold Equity and Total Return Bond pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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