Correlation Between BlackRock Capital and Sprott

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

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

Diversification Opportunities for BlackRock Capital and Sprott

0.18

Correlation Coefficient

BlackRock Capital  Sprott

Average diversification

The 3 months correlation between BlackRock and Sprott is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Capital Allocation and Sprott Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Inc and BlackRock 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 BlackRock Capital Allocation 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 BlackRock Capital i.e., BlackRock Capital and Sprott go up and down completely randomly.

Pair Corralation between BlackRock Capital and Sprott

Given the investment horizon of 90 days BlackRock Capital Allocation is expected to under-perform the Sprott. But the stock apears to be less risky and, when comparing its historical volatility, BlackRock Capital Allocation is 2.66 times less risky than Sprott. The stock trades about -0.03 of its potential returns per unit of risk. The Sprott Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,224  in Sprott Inc on December 26, 2024 and sell it today you would earn a total of  236.00  from holding Sprott Inc or generate 5.59% return on investment over 90 days.

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

BlackRock Capital Allocation  vs.  Sprott Inc

BlackRock Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock Capital Allocation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BlackRock Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Sprott Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Sprott may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BlackRock Capital and Sprott

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

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.