Correlation Between Associated Capital and Sprott

Can any of the company-specific risk be diversified away by investing in both Associated Capital and Sprott 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 Associated Capital and Sprott into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associated Capital Group and Sprott Inc, you can compare the effects of market volatilities on Associated Capital and Sprott 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 Associated Capital with a short position of Sprott. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and Sprott.

Diversification Opportunities for Associated Capital and Sprott

0.73

Correlation Coefficient

Associated Capital  Sprott

Poor diversification

The 3 months correlation between Associated and Sprott is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and Sprott Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Inc and Associated Capital 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 Associated Capital Group are associated (or correlated) with Sprott. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Inc has no effect on the direction of Associated Capital i.e., Associated Capital and Sprott go up and down completely randomly.

Pair Corralation between Associated Capital and Sprott

Allowing for the 90-day total investment horizon Associated Capital Group is expected to under-perform the Sprott. But the stock apears to be less risky and, when comparing its historical volatility, Associated Capital Group is 1.08 times less risky than Sprott. The stock trades about 0.0 of its potential returns per unit of risk. The Sprott Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,057  in Sprott Inc on September 5, 2024 and sell it today you would earn a total of  1,361  from holding Sprott Inc or generate 44.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Associated Capital Group  vs.  Sprott Inc

Associated Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Associated Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sprott Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal forward indicators, Sprott demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Associated Capital and Sprott

The main advantage of trading using opposite Associated Capital and Sprott positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital position performs unexpectedly, Sprott 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 will offset losses from the drop in Sprott's long position.

The idea behind Associated Capital Group and Sprott Inc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.