Correlation Between Nasdaq-100 Index and Sprott Gold
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Index and Sprott Gold 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 Nasdaq-100 Index and Sprott Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Index Fund and Sprott Gold Equity, you can compare the effects of market volatilities on Nasdaq-100 Index and Sprott Gold 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 Nasdaq-100 Index with a short position of Sprott Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Index and Sprott Gold.
Diversification Opportunities for Nasdaq-100 Index and Sprott Gold
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nasdaq-100 and Sprott is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Sprott Gold Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Gold Equity and Nasdaq-100 Index 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 Nasdaq 100 Index Fund are associated (or correlated) with Sprott Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Gold Equity has no effect on the direction of Nasdaq-100 Index i.e., Nasdaq-100 Index and Sprott Gold go up and down completely randomly.
Pair Corralation between Nasdaq-100 Index and Sprott Gold
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 0.58 times more return on investment than Sprott Gold. However, Nasdaq 100 Index Fund is 1.72 times less risky than Sprott Gold. It trades about 0.1 of its potential returns per unit of risk. Sprott Gold Equity is currently generating about -0.14 per unit of risk. If you would invest 5,113 in Nasdaq 100 Index Fund on August 28, 2024 and sell it today you would earn a total of 117.00 from holding Nasdaq 100 Index Fund or generate 2.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Sprott Gold Equity
Performance |
| Timeline |
| Nasdaq 100 Index |
| Sprott Gold Equity |
Nasdaq-100 Index and Sprott Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100 Index and Sprott Gold
The main advantage of trading using opposite Nasdaq-100 Index and Sprott Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Index position performs unexpectedly, Sprott Gold 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 Gold will offset losses from the drop in Sprott Gold's long position.| Nasdaq-100 Index vs. Blackrock Health Sciences | Nasdaq-100 Index vs. Allianzgi Health Sciences | Nasdaq-100 Index vs. Highland Longshort Healthcare | Nasdaq-100 Index vs. Baron Health Care |
| Sprott Gold vs. Sprott Junior Gold | Sprott Gold vs. Sprott Gold Miners | Sprott Gold vs. Europac Gold Fund | Sprott Gold vs. US Global GO |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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