Correlation Between GraniteShares Gold and Sprott Gold

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

Diversification Opportunities for GraniteShares Gold and Sprott Gold

0.83

Correlation Coefficient

GraniteShares Gold  Sprott Gold

Very poor diversification

The 3 months correlation between GraniteShares and Sprott is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares Gold Trust and Sprott Gold Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Gold Miners 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 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 Miners has no effect on the direction of GraniteShares Gold i.e., GraniteShares Gold and Sprott Gold go up and down completely randomly.

Pair Corralation between GraniteShares Gold and Sprott Gold

Considering the 90-day investment horizon GraniteShares Gold Trust is expected to generate 0.46 times more return on investment than Sprott Gold. However, GraniteShares Gold Trust is 2.18 times less risky than Sprott Gold. It trades about 0.16 of its potential returns per unit of risk. Sprott Gold Miners is currently generating about 0.07 per unit of risk. If you would invest  2,593  in GraniteShares Gold Trust on October 25, 2024 and sell it today you would earn a total of  125.00  from holding GraniteShares Gold Trust or generate 4.82% return on investment over 90 days.

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

GraniteShares Gold Trust  vs.  Sprott Gold Miners

GraniteShares Gold Trust

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares Gold Trust are ranked lower than 1 (%) 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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Sprott Gold Miners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Gold Miners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Sprott Gold is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with GraniteShares Gold and Sprott Gold

The main advantage of trading using opposite GraniteShares Gold and Sprott Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares Gold 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.

The idea behind GraniteShares Gold Trust and Sprott Gold Miners 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.