Correlation Between Sprott Gold and Sprott Junior
Can any of the company-specific risk be diversified away by investing in both Sprott Gold 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 Gold 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 Gold Miners and Sprott Junior Gold, you can compare the effects of market volatilities on Sprott Gold 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 Gold with a short position of Sprott Junior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprott Gold and Sprott Junior.
Diversification Opportunities for Sprott Gold and Sprott Junior
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sprott and Sprott is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sprott Gold Miners and Sprott Junior Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Junior Gold 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 Miners 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 Gold has no effect on the direction of Sprott Gold i.e., Sprott Gold and Sprott Junior go up and down completely randomly.
Pair Corralation between Sprott Gold and Sprott Junior
Given the investment horizon of 90 days Sprott Gold is expected to generate 1.75 times less return on investment than Sprott Junior. But when comparing it to its historical volatility, Sprott Gold Miners is 1.15 times less risky than Sprott Junior. It trades about 0.03 of its potential returns per unit of risk. Sprott Junior Gold is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,725 in Sprott Junior Gold on August 28, 2024 and sell it today you would earn a total of 928.00 from holding Sprott Junior Gold or generate 34.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprott Gold Miners vs. Sprott Junior Gold
Performance |
| Timeline |
| Sprott Gold Miners |
| Sprott Junior Gold |
Sprott Gold and Sprott Junior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprott Gold and Sprott Junior
The main advantage of trading using opposite Sprott Gold and Sprott Junior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprott Gold 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 Gold vs. Sprott Junior Gold | Sprott Gold vs. iShares MSCI Global | Sprott Gold vs. US Global GO | Sprott Gold vs. Sprott Physical Gold |
| Sprott Junior vs. Sprott Gold Miners | Sprott Junior vs. Amplify ETF Trust | Sprott Junior vs. US Global GO | Sprott Junior vs. Global X 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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