Correlation Between GraniteShares Gold and Sprott Physical

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

By analyzing existing cross correlation between GraniteShares Gold Trust and Sprott Physical Silver, you can compare the effects of market volatilities on GraniteShares Gold and Sprott Physical 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 GraniteShares Gold with a short position of Sprott Physical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares Gold and Sprott Physical.

Diversification Opportunities for GraniteShares Gold and Sprott Physical

0.93

Correlation Coefficient

GraniteShares Gold  Sprott Physical

Almost no diversification

The 3 months correlation between GraniteShares and Sprott is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares Gold Trust and Sprott Physical Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Silver and GraniteShares 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 GraniteShares Gold Trust are associated (or correlated) with Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Silver has no effect on the direction of GraniteShares Gold i.e., GraniteShares Gold and Sprott Physical go up and down completely randomly.

Pair Corralation between GraniteShares Gold and Sprott Physical

Considering the 90-day investment horizon GraniteShares Gold is expected to generate 1.58 times less return on investment than Sprott Physical. But when comparing it to its historical volatility, GraniteShares Gold Trust is 1.99 times less risky than Sprott Physical. It trades about 0.08 of its potential returns per unit of risk. Sprott Physical Silver is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  977.00  in Sprott Physical Silver on September 5, 2024 and sell it today you would earn a total of  72.00  from holding Sprott Physical Silver or generate 7.37% return on investment over 90 days.

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

GraniteShares Gold Trust  vs.  Sprott Physical Silver

GraniteShares Gold Trust

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares Gold Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, GraniteShares Gold is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Sprott Physical Silver

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Physical Silver are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Sprott Physical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GraniteShares Gold and Sprott Physical

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

The idea behind GraniteShares Gold Trust and Sprott Physical Silver 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.