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 Platinum, 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

0.65

Correlation Coefficient

GraniteShares Gold  Sprott Physical

Poor diversification

The 3 months correlation between GraniteShares and Sprott is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares Gold Trust and Sprott Physical Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Platinum 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 Platinum 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 Trust is expected to generate 0.7 times more return on investment than Sprott Physical. However, GraniteShares Gold Trust is 1.43 times less risky than Sprott Physical. It trades about 0.33 of its potential returns per unit of risk. Sprott Physical Platinum is currently generating about 0.22 per unit of risk. If you would invest  2,600  in GraniteShares Gold Trust on October 27, 2024 and sell it today you would earn a total of  118.00  from holding GraniteShares Gold Trust or generate 4.54% return on investment over 90 days.

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

GraniteShares Gold Trust  vs.  Sprott Physical Platinum

GraniteShares Gold Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GraniteShares Gold Trust has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Physical Platinum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Platinum has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Etf's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the ETF retail investors.

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 Platinum 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.